The boom, bust and death of apps: Chatbots will bring an end to their golden days

Nine years ago, when the iPhone was launched, the smartphone app market was worth pretty much nothing. Now, two-million apps later, analysts Statista predict it will be worth $76.52 billion. However, in another nine years could it be back to zero again?

The gloom follows a report by US analysts Comscore on the state of the US app market, published this month. It revealed the true extent of the slowdown in the app market. Almost two out of every three American smartphone users download zero apps a month. Not a single one.

It's not that they don't have apps – it's just that having downloaded the ones they want, they are done. As Forrester, another US analyst put it bluntly: "Your Customers Will Not Download Your App".

Users do, however, love those few apps they do download. According to the report: "A staggering 42% of all app time spent on smartphones occurs on the individual's single most used app. Nearly three out of every four minutes of app usage occurs on one of the individual's top four apps."

And those four, according to data from Nomura, are WhatsApp, Messenger, Facebook and Snapchat. Instagram is number five. In other words four of the top five most used apps are owned by Facebook. It would have been five had Snapchat's 23-year-old co-founder Evan Spiegel not turned down a $3-billion offer from Facebook CEO Mark Zuckerberg.

This consolidation and stagnation of the app market into a few social-media colossi, and an awful lot of also-rans, explains why Facebook is investing so heavily in so-called 'bots' and why it hopes companies will love them for doing so.

Rise of the bots

Bots — short for robot — are a way for consumers to interact with companies. Bots pretend to be human and you talk to them through a chat-like interface. At the other end sits an artificial intelligence computer that can, in theory, make sense of your broken sentences, text abbreviations and absence of capital letters. Thus, supposedly, for today's chat-obssessed millennials, conversing with Megacorp Inc. will be no different to chatting with their mates. That, at least, is the idea.

For Facebook the important thing about bots is that they operate inside its Messenger service, one of the apps already on a user's smartphone. If so, then Facebook can take a cut of all the e-commerce deals done over its platform, without having to do anything itself.

And since the bot lives inside messenger there is no need for users to install another app to clutter up their phone.

Earlier this year Zuckerberg demonstrated a bot from 1-800-Flowers that could carry on a conversation with a customer who wanted to order flowers.

"You never have to call 1-800-Flowers again," Zuckerberg gloated. That was probably not what Jim McCann, chairman and CEO of 1-800-Flowers.com, really wanted to hear.

That, at least, is the theory.

But there are lot of troublesome issues to be solved before bots come even close to replacing apps. Most significantly, as anyone who has used Apple's Siri will tell you, artificial intelligence is nowhere near ready for primetime.

Furthermore building AI-driven bots is an order of magnitude more complicated than bashing out an iPhone app in a week.

Then there is the non-trivial (as developers like to call them) problem of discovery. Finding apps is a terrible experience, is finding bots likely to be any better? If 1-800-FLOWERS.COM bot is no easier to find than 1-800-FLOWERS.COM app, what have they achieved?

Then there is the mode of interaction. A chat-like interface is good for some tasks such as "send flowers to my partner on Tuesday" or "what time is the next flight to Dublin?", but even more hopeless for browsing than an app. And finally, it is by no means clear how e-commerce is going to play out in the constrained bubble of a chat service. Do I really want to be 'tap, tapping' away strings of sentences when all I want to do is order quattro stagioni pizza, which I can do by clicking on a few links?

So why the excitement?

The bot represents a new front in the continuing, titanic struggle between the tech giants – this time Facebook has occupied the key strategic territory and Apple and Google will have to fight uphill if they want to take it.

If bots are The Next Next Big Thing, the victor in the struggle has the ability to dictate the terms of surrender to an entire generation of retailers who were promised that riches lie in online commerce but have yet to see them.

It is also a sign of a tech world still trying to figure out mobile. In much the same way that early TV was radio with pictures, today's app-cluttered smartphone home screen is essentially your old PC desktop, squeezed onto a smaller screen.

What we are seeing is how the tech giants are still trying to figure out the winning strategy for mobile. Apple's iOS planted the first flag, a bunch of apps, none of which could really talk to each other. But as all Apple wanted you to do was to buy a new phone every 18 months, that was fine.

Google shamelessly followed Apple's lead, but playing to its strengths, allows much more interaction between its own services, with the walls between apps blurring. Android users are familiar with Google Now – re-christened recently as Google Assistant, showing what Google really has up its sleeve.

What's the future look like for apps?

The stagnation of the app economy suggests a new method of interaction might be needed, and perhaps bots are the Next Next Big Thing. If so Facebook has stolen an early lead. Google is shaping up for the fight. Apple has yet to reveal its hand.

But are bots that new future? They may be, but not as they currently stand. The technology isn't good enough and the interface is clunky. So it may be too early to predict the early demise of the $77 billion app market just yet. But for certain as users' enthusiasm for downloading apps has waned, its brief golden days are over.