What makes a ‘Killer App’ Killer?

A new research project at MIT Sloan examines how entrepreneurial firms successfully innovate and compete on mobile platforms.

Cambridge, Mass., March 22, 2013—What makes a ‘Killer App’ killer? Why do some app writers strike it rich, while others go broke? Why do some startups feature their apps at both Apple’s iTunes store and Google’s Android store, while others go with one or the other?

A new research project lead by MIT Sloan School of Management’s Jason Davis and Pai-Ling Yin and Boston University graduate student Yulia Muzyrya seeks to answer those questions by exploring how firms innovate and compete on emerging mobile application platforms. Using a combination of publicly available information, survey data, and material from interviews with entrepreneurs, the project looks specifically at issues around innovation, commercialization, and multi-homing (hosting an app at more than one online store) within the mobile ecosystem.

“This project is at the intersection of entrepreneurship and innovation,” says Davis.  “We are trying to figure out: why do some companies produce successful innovation and others do not? Ultimately we want to discover a set of best practices to help firms waste less time and become more effective at entrepreneurship.”

The project helps fill a gap in the research on how new technology-based ventures develop products and services and compete with others. “The explosive growth of software applications for mobile devices such as smartphones and tablets creates an unprecedented opportunity to study innovation and strategy,” says Davis.

“First, there is a lot of data to analyze. Second, this data—from the hundreds of thousands of firms that have made and are making apps—is widely available on the Internet. Third, mobile innovation is ongoing and happening now in real time.”

Despite the stubbornly high unemployment rate and a sputtering economic recovery, the mobile app industry is thriving. A recent study by the Wireless Association and the Application Developers Alliance found that the app economy has created 519,000 new jobs nationwide since 2007. By 2016, revenue from mobile apps is expected to reach more than $46 billion, according to Recon Analytics and ABI Research.

“At a time when resources are scarce, mobile app platforms create a viable way for people to go into business for themselves or on the side,” says Yin. “These platforms are essentially a marketplace and distribution center that represent an inexpensive way for people to create products and become entrepreneurs.”

Most prior research on entrepreneurship emphasizes the role of large established firms, despite the fact that many of the most inventive products and services come from start-up companies. This is especially true in the mobile app universe. Large companies have produced some notable apps, including Google (Google Maps) and Facebook, but small, entrepreneurial firms are responsible for many of the most popular apps. These include: Instagram, the photo sharing network created by two 20-something Stanford grads, Angry Birds, the mobile game franchise produced by Rovio, a small Finnish company, and Pandora, the Internet radio site, which was founded by Tim Westergren, who at the time was working as a pianist and composer.

“Just as the dawn of the Internet sparked the dot-com boom 15 years ago, apps have stimulated a new class of entrepreneurs,” says Davis. “This industry is only beginning, and there’s going to be a lot of experimentation as companies try out new things. No one really knows where we’ll go from here, but our project will provide a comprehensive and systematic analysis of the evolution of the mobile apps environment from which we can extract best practices for successful entrepreneurship. ”