Getting a Line on App Economy

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Have you ever used one of those neat applications from the iPhone or BlackBerry app stores? You know, the ones that allow you to check sports scores in real time, manage your bank account, buy and sell blue chip stocks, or play Pacman in the lunch line?

If you answered yes, you are like a growing number of Angelenos – and Americans – who can’t wait for the next app that will help make life more convenient, lively and fun. It is, after all, a very good thing that we are able to order chicken wings through Pizza Hut’s e-commerce mobile app or locate nearby restaurants, gas stations and department stores with location-based application software.

But what we must now understand about these new “convenience” apps, however, is that they have much larger implications than simply making life more manageable. They are now part of an explosively lucrative financial sector being built around them: the “app economy.” And it is quickly – and quietly – morphing into the biggest thing since Google’s search and Facebook’s social networking.

Not only will this new economy be a financial juggernaut, but it could affect you, your company and our region more directly than you might think. In this regard, we should no longer think of ourselves merely as consumers of these mobile and social networking apps; we should also begin to think of ourselves as producers of them.

And the reason for this is because the so-called app economy is still leaderless – it is only two years old – and literally up for grabs within most industries on both the local and national levels. It’s leaderless in the sense that unlike the companies that have created the gigantic developer platforms (i.e., Apple, Facebook, etc.) that provide a framework for these apps, there are very few companies that are actually dominant within these platforms outside of virtual gaming. And the more traditional companies that do currently operate within them usually just offer informational applications.

In other words, there are very few businesses, local or national, that seriously play in this potential multibillion-dollar sandbox and even fewer companies that actually offer their own purchasable goods and services within these apps like an eBay digital storefront. Yet not only is this a great new market but it’s also the next iteration of the online world: Web 3.0.

This means that we as individuals, companies and a region should now compete in this 21st century virtual gold rush by taking the lead in developing this new financial ecosystem – for our local economy as well as for the larger national economy. It does make a lot of sense that the City of Angels is poised to do this: Our economic diversity is representative of American industry, we have an unmatched global talent pool of engineers and programmers to design these new apps, and we have historically proved time and again we have the ability to pioneer new industries (i.e., motion picture, fashion, aerospace, digital animation, etc.) that give our companies and our economy a natural edge.

One of a kind

After all, if we’ve already led the way in creating these aforementioned megasectors in Los Angeles and throughout the country, why can’t we lead the way in creating the new app economy, too? We can leverage our one-of-a-kind financial ecosystem and strategically utilize our local businesses to win in local, regional, and national application markets with our unique assets and history.

But we can only do so if our local companies start actively thinking about innovative ways to offer their purchasable products and services through this new app economy. El Segundo-based DirecTV has successfully figured out how to do this with their wildly successful iPhone app, and all of our local businesses need to figure it out, too.

L.A.’s many small ethnic restaurants, for example, that operate traditional storefronts and attract mainly local patrons, should follow DirecTV’s model by creating an app for takeout and delivery services as a way to distinguish themselves from their competition, attract new customers and increase loyalty. In doing so, they would not only see financial benefits for themselves, but they would contribute to the broader local app economy.

The same principle applies to bigger chain restaurants headquartered in Los Angeles County. They could compete on a national scale but could reach more consumers, create more financial value and help build the broader U.S. app economy if they threw a little skin in the game like DirecTV.

In other words, whether a local company is big or small, competes mostly in Los Angeles or throughout the country, real eggs need to be put into this innovative economic basket because real money hangs in the balance. A virtual network of linked commercial applications is going to be a hugely transformative part of our future and we shouldn’t let it pass us by.

So let’s get off the sidelines, Los Angeles, and create our own local app economy – and one for the rest of America while we’re at it, too. The financial payouts will be well worth it.

Rob Carpenter is an entrepreneur and writer. He lives in Los Angeles.

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