Market view and Insights
Small programs that run on mobile devices have made a big impact on digital life and resulted in big exits for their creators.
Without them, smartphones wouldn’t really be smart. Apps, the small programs that offer a seemingly infinite variety of games, entertainment, information and productivity tools, are at the heart of today's connected life. Since almost three-quarters of the global population aged 10 and older own a mobile phone and more than 1.2 billion new smartphones were sold in 2022 alone, there's hardly a chance to avoid apps to do banking, get the weather, stream movies and music or just kill some time with a quick game.
It's an addictive habit. On average, Americans spend almost three-and-a half hours a day on their mobile apps. In 2021, consumers around the world downloaded close to 144 billion apps, almost half of them games. And while Apple was the first to introduce an app store back in 2008 to augment the capabilities of the iPhone, the lion share of downloads happens on Android devices, the alternate mobile universe created by Google.
Yet apps have been around much longer than most realize, going back to the first clunky phones that lacked both a touch screen and sizable storage. Some of these pioneering programs have since become curiosities for tech history buffs, while others live on to this day and have showered their inventors with sizable exits.
Take a stroll down memory lane and revisit what's become of a handful of legendary apps and their creators.
Imagine the days when computers had a mere 16 kilobytes of memory. That's when Peter Trefonas, a college student in New Orleans, was noodling on ideas for games that would run on the then popular TRS-80 computer. While fiddling with ways to control game movements with the keyboard, he happened upon a bug in his code that left a graphical trail on the screen as the cursor moved, like a snake or worm slithering around. "This was interesting itself!" as Trefonas recalls his Aha! moment back in 1978.
He proceeded to write Worm for several computers, including the freshly launched Apple II+. He even wrote a version for two players who had to share different sides of the same keyboard and coded a successor game called Hustle where the worm grew longer as it gobbled up its targets. "It took me a couple of weeks with a few hours here and there writing code."
Trefonas made "resonably good money" from his hobby, selling four versions of his programs through a gamer magazine that was distributed on cassette tape. Forward two decades, and an engineer at mobile phone giant Nokia resurrected Worm as Snake. Since it came pre-installed on Nokia's devices, it ended up becoming one of the most popular mobile games of all times, with an estimated 350 million installs. Trefonas didn't get rich from his tinkering, but went on to earn a Ph.D. in philosophy and organic chemistry before embarking on an illustrious career at Dow Chemical and DuPont.
When the Israeli startup Mirabilis launched ICQ (a play on the phrase "I seek you") after just two months of development in 1996, it was the first stand-alone instant messenger app that predated offerings from big players such as Yahoo or AOL who followed suit in 1998 and 1999. Its four founders, all 25 years young, were bankrolled by the father of one of them, Israeli serial entrepreneur Yossi Vardi, who is also co-chair of the annual DLD conference.
ICQ's swiftly growing user base during the first Dotcom boom attracted the interest of online platform AOL which bought the messaging service (and the intellectual property behind it) in 1998 for a total of 407 million USD. In hindsight, ICQ's success was a blend of good timing and luck, Yardi recalled years later: "If they came to me a year earlier, not in '96 but '95, there would have been too few people who were using the internet. In 1997, there were already seven competing products, and two years later there were 1000 competing products. So they were incredibly capable in developing the product, but they also had a large amount of luck with the timing."
The new owner didn't do as well with the investment. Rushing through a restructuring effort, AOL sold the messaging service in 2010 to Russian investors for a reported 188 million USD, well below its initial asking price. Mail.ru (now known as VK) kept ICQ alive and relaunched it in 2020 to capitalize on the pandemic-driven surge in videoconferencing. Even protesters in Hong Kong took a liking to the updated app. Cofounders Yair Goldfinger and Erik Vardi went on to found several more tech companies, with mixed results.
In hindsight, ICQ's success was a blend of good timing and luck, Yossi Vardi recalled.
In 1999, all consumers could do on their mobiles was play simple games, make calls and send text messages. But Chris Barton at UC Berkeley and some friends had an idea to change that. What if you could use your phone to identify any song while in a bar or club? In theory, it was feasible using the built-in mic and an inbound text message that would name that tune. "All the audio signal processing experts told us it was impossible to do, especially identifying all music against background noise. But we knew we had the tech to solve the problem," Barton says.
In 2000, he cofounded Shazam and in 2002 launched it as a fee-based service. It languished for years - until Apple unveiled the iPhone and shortly afterward its app store in the spring of 2008. Shazam made it onto the list of handpicked apps, including its own TV ad. In 2017, with more than a billion downloads, Apple announced it was buying Shazam for 400 million USD and has since integrated it into its mobile operating system. Barton, who works as a keynote speaker on innovation from his home base in the Bay Are area, says it fills him with joy to see people using his creation when he goes out or stands in line at a store.
Stay tuned to MAG/NET to read the second part of our story "Insatiable app-etite" about Skype, Summly, Bumble and Last.fm next week.