Opportunities and Challenges for the Irish App Economy

On the RTÉ Nine O’Clock News last night, I spoke about app economy growth areas like AR and video in a piece with Will Goodbody on the opportunities and challenges for the Irish app economy. But just how important is the app economy to the overall economy in Ireland, and what do we need to do to continue growing it?

According to a recent report from US think tank PPI, Ireland is punching above its weight in the European table for what is called “app intensity”, or the percentage of jobs in the app economy to all jobs: the number for Ireland is close to 1%. Of the 2-and-a-quarter million jobs in Ireland, that’s about 20,000 people, and that figure of app economy jobs in Ireland increased by 5,000 since just last year. Ireland has performed well in comparison to other countries, and had the third highest growth in Europe in terms of app economy jobs, up 33% from 2017 to 2018.

We can thank the development of strong innovation ecosystems and startup communities in our capital and regional cities over the past five or more years, and the country’s third level institutions and research centres continue to produce talented graduates to work in the core areas of app development, computer engineering and software security, which are further supported by indirect and spillover jobs. However, the Director of Ibec’s Technology Ireland group, Una Fitzpatrick, has cautioned that there is a skills shortage happening, and a serious pinch point is on the way over the next couple of years if this is not addressed.

It is fair to say that apps have radically transformed the way we live and work. The first App Store opened just over 10 years ago in July 2008, and because anybody with decent coding skills could create an app, we had all kinds of creative people imagining what could be done with the combination of internet-connected, location-aware, touchscreen multimedia devices that are almost always within hands reach. All of the tasks that typically took hours or days, from booking holidays and buying presents, to paying bills and arranging meetings can typically be done in minutes, with a greater range of options available. Also, new tasks that were not really possible before can now be performed: preheating your home or car from your phone; getting real-time information on nearby transport options; or live streaming a birthday party to your family and friends.

The novelty of apps may have worn off, but it is becoming harder and harder to imagine life without them. We increasingly expect there to be an app for everything, whether it’s the services we already use or new ones we are still imagining. There’s still lots of room for new innovations, for example, there has been a recent increase in the adoption of digitally enhanced reality or augmented reality apps. Last year, another big growth area for apps was streaming video: this led to an increase of over 85 percent in consumer spend on iOS, and over 70 percent on Google Play. Most people have multiple video apps to access various free and paid services: two thirds of people in the US have two or more video apps.

Globally, mobile app spend is at about €94 billion ($110 billion) this year, up by a factor of five from just five years ago. (In 2013, as part of the Eurapp project I led, we had forecasted a growth from €20 billion to nearly €70 billion in 2018.) Total mobile commerce is apparently 10 times larger, and will continue to grow into the trillions. As regards jobs, PPI gives an overall 2018 figure of 2.1 million app economy jobs in Europe, using a conservative estimate of two indirect or spillover jobs for every app job. In the literature, this multiplier effect can go as high as 5 or even higher, potentially yielding over 4.2 million app economy-related jobs.

However, there are certain risks to the Irish app economy and we need to continue to support this growth sector in Ireland. There are a number of things we can do. The first is to address the skills shortage highlighted by Technology Ireland and others, by making sure we produce sufficient numbers of tech graduates to meet the increase in demand, but also by attracting more technology talent to the country. This aligns to Tech/Life Ireland, a national initiative to brand Ireland as a top destination to pursue a career in technology, and I’ve recently joined its steering group.

Secondly, we need to make sure that technology startups have the requisite mix of engineering, design and business know-how to succeed, as encouraged by programmes like TechInnovate at NUI Galway. For the small app company in Ireland, there are various business challenges: competing with free or lower price apps from larger competitors; the cost of acquiring customers; getting access to capital and finance; and then there are the revenue sharing requirements from the big US platforms and having to compete with higher US salaries for mobile developers and engineers. Many app company founders have strong computing skills, but they often lack the entrepreneurial skills to develop successful enterprises driven by their innovations. In an increasingly competitive (app) marketplace, we need to make sure that our tech savvy founders also become business savvy and can truly understand their target customers’ priorities as well as the technology’s potential.

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