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Snap Inc IPO: What does it mean for apps?

Stuart BolgerStuart Bolger
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In the S-1 paper, Snap Inc explains that Apple is a competitor. Sounds odd, right?

Snap Inc - the company behind the world renowned interactive social media app Snapchat - has filed for its initial public offering last week. As part of the process to be listed on the Stock Exchange, the company released its S-1 document to the public - directed at potential investors. This document gives us a great insight into the “camera” company that’s taking the world by storm with clever hardware and inventive app technology. In the company’s attempt to raise an additional $3 billion through their IPO, a few things have come to light.

Android Discrimination Exists

The firm cites that user engagement in general is higher on Apple’s iPhones - the devices the firm prioritizes in app development. This means that Android users will continue to see less features throughout the app relative to users using iPhones. This admission finally gives reason for the well-documented slow performance, low image and video quality across Google’s operating system-based devices like Samsung, HTC, LG, Sony and Huawei.

With 158 million daily active users and 2.5 billion “snaps” created daily across iOS and Android, Snap Inc’s development team already has its work cut out.

All Apps are at the Whim of Manufacturers

In the S-1 paper, Snap Inc explains that Apple is a competitor. Sounds odd, right? As you’d expect, companies like Facebook, Twitter and Instagram are listed as rivals. But Apple innately possess a far greater risk to Snap Incand its software products - save for iMessage and FaceTime.

Hardware modifications from the California-based firm in the future could see Snapchat lose functionality on iPhones - the devices of its largest user base. Cameras, sensors and gyroscopes (among others) allow Snapchat to be the highly engaging and fun app that it is. Any changes to these hardware features made by manufacturers would set back the development of the app. Indeed, apps across Apple’s development ecosystem and Google’s too are at the whim of mobile phone designers and manufacturers. Perhaps a reason why Snap Inc has pivoted towards making its own hardware in the form of Spectacles.

Even the Big Hitters Have Dependencies

Snapchat relies on Google Cloud storage. Unlike most people who use Google Drive’s free 15GB cloud storage, Snapchat pays for the storage solution. And this is dangerous. Price changes and regional limitations of the service (especially in the likes of China) could be really troubling for the app in years to come. Expansion of the app, in particular, could be held back with this dependency on Google’s storage infrastructure.

What Does Snap Inc’s IPO Mean for Apps?

Despite being a young company that’s only been generating revenue for two years and one that’s currently experiencing heavy losses ($514 million in 2016), advertisers and marketers alike love the platform. Adverts have been played across the Snapchat app for over two years now. This is despite the fact the platform does not provide solid ROI metrics and general analytics.

One of the key takeaways from Snap’s IPO is that mobile - more than ever - is the new king of digital. Mobile ecommerce, entertainment and engagement have never been higher. The average users opens the Snapchat app 18 times a day - spending 25-30 minutes a day on the app.

Snap Inc’s value is estimated to be $25 billion following the IPO. This is not only because of the massive global user base but the room for further innovation and revenue streams for the company. Snap places huge importance on innovating and developing their product offerings. Their sizeable 2ramping up of R&D operations and acquisitions - highlighted in Snap’s losses - is a testament to this.

The case of Snapchat shows that apps and app developers cannot just rest on their laurels and let the ad revenue roll in when the user demographics are so fickle. To keep users coming back, great apps need constant reevaluation, a compelling user case and - most importantly - great vision.

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Stuart Bolger
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Stuart Bolger

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