Rise of Web Applications

The number of web applications is exploding. Like the iPhone, there is a web app for everything and it’s growing every day with no end in sight. Over the next several years, I expect to see a significant shift Internet usage towards feature rich web applications. Right now, many of these web apps are free but as demand grows so will the costs of production, hosting, and maintenance.

Need to Monetize Web Apps

Developers put a lot of time and effort into building these applications. Servers and bandwidth are needed to keep up with the growing demand. The big players are funded by VC money but there are thousands of small developers who need a payment system to keep their dreams alive.

A few years ago developers relied on advertising to pay the bills. This is no longer the case. Advertising has slowed causing developers to shift from the acquire-as-many-users-as-possible-so-we-can-make-money-through-advertising model toward thinking more about individuals and what they would pay to use. This leads us back to the need for a payment system.

Over the next few years there will be a rise in the number of web applications that use micro-payment systems . Apple has been successful building such a model on the iPhone as has Facebook in raising money for charities. People are slowly becoming accustomed to paying for applications again and they’re willing to do so if the price is right.

Why Apple?

Right now Apple is in the best position to dominate the web application market for one simple reason, iTunes. iTunes gives them 3 big advantages in this market:

• Micro Payments: iTunes is already used by millions of people worldwide and their model is built for small purchases. It’s already used in thousands of iPhone apps and could easily be adapted for making payments from within web apps.
• Infrastructure: Apple has the infrastructure in place for managing applications – reviews, recommendations, etc. – The foundation used for discovering new iPhone apps would be a great way for finding and cataloging web apps.
• Community: Apple has a system that developers have been using for over a year to sell their iPhone apps. It isn’t perfect, but it can be leveraged toward creating a valuable ecosystem for developers.

There are other players that will battle for this market – Facebook, Microsoft, Amazon, and PayPal – but only Apple has a complete system in place. If they duplicate the best features that iPhone app developers have, they are 80% of the way toward creating a successful web app market place.