This post was originally published here by Corey Miller, Analyst at Scout Ventures.
Most people have heard of WeChat. Connie Chan recently wrote a great piece on the app and how it has grown into a behemoth in China. Basically, the gist is that what started as a messaging app has grown into a platform of sorts that hosts an abundance of other services within the app. This is the main reason why messaging apps such as Whatsapp, Kik, Viber, and Line have received remarkable valuations. The potential is clear: create an app that can essentially power other services (payments, bookings, chat, social media, etc) within itself and eventually grow into a consumer-centric giant. I’l refer to this strategy from here on out as an Application as a Platform (AaaP).
Although this approach has certainly succeeded in countries such as China, India, Brazil and many others, it hasn’t really taken off in the US. There certainly is the potential for it, though, since the most popular apps are owned/provided by large companies. Basically, as the number of apps continues to grow, so does the noise—and as a result, people continue to turn to established companies to act as gatekeepers for their attention. So to take that one step further, if people are actively using relatively few apps on a consistent basis, why not combine the features of many apps into one app that users spend most of their time in.
So, where does this leave us today? In the US, we are definitely starting to see companies attempt to emulate the WeChat model. Facebook should be the first to come to mind. As soon as Facebook launched Messenger as a standalone app, you could kind of see where they were going. Already, they’ve launched payments within Messenger, are testing an AI/Personal Assistant feature, and have continuously lobbied for apps to connect to it as well. They even refer to Messenger as a platform on their website. In an ideal world, from a Facebook perspective, users could ditch apps such as iMessage, Venmo, Square, gaming apps, SMS, AI’s, etc and use Messenger as their go-to.
Snapchat is another emerging player in this space. The app, which is thefastest growing social network, has a very clear opportunity to monopolize on their wide-reaching user base. Besides ads, their Discover feature aims to be a place where users (who are mostly of the younger demographic) can gather news. You can definitely start to see Snapchat as an emerging AaaP then, especially as it adds potential features such as payments and commerce. Therefore, the potential becomes a scenario where users eventually replace news apps, payment apps, product-discovery apps with Snapchat.
It’s clear that Uber is not stopping at personal transportation. Aiming to be your on-demand solution for basically everything, you could see Uber to start to evolve into an AaaP. In this silo, a user can: order transportation, order food, and send/deliver shipments—thus effectively replacing the Postmates and Shyps of the world.
Although these apps are attempting to become emerging platforms, we should not forget the sleeping giants in the room: Apple and Google. If, one day, Apple decided to open up an iMessage API in the next iOS update, you could see a sort of native AaaP start to emerge. I don’t necessarily envision a scenario like this playing out since Apple likes to control every aspect of the user experience, but it’s worth noting they could do it if they determined the value was there.
In the end, it doesn’t seem that this market will evolve the same way as it has in China. Yes, users will continue to spend time in fewer and fewer silos, but it might not be a winner take all space. Uber could emerge as the on-demand AaaP, Snapchat as a content consumption AaaP, and Facebook as a social AaaP. Or maybe the United States consumer is a different beast altogether, and customers will stay loyal to an abundance of different apps (Venmo, Postmates, Shyp, etc. may very well have a permanent place in the mobile ecosystem).
Regardless of the end result, one thing is clear: as the mobile ecosystem matures, the emergence of new apps is becoming less and less common. As a result, dominant apps are beginning to integrate multiple functionalities into their silos to frame themselves as AaaPs. It certainly will be interesting to see the outcome of these developments in the coming years.