Clint loves mobile technology. Before starting at Handango, he was a small independent vendor dealing with Enterprise Reporting software. Selling this in 1999, Clint started looking round Dallas for more opportunities. In February 2000 he was hired by GoPDA (which became Handango) as their Director of Business Development. Which is, in his own words, "the sort of general-purpose title they give you, along with a company pen, when you walk in the door."
Now Handango has 75 staff spread between its headquarters in Dallas and their office in London. Why London, I asked? After all, other countries (such as Germany) have a lot more PDA’s per head of population than the UK. "There are a few reasons for that," Clint explains, "mostly having nothing to do with mobile technology. The regulations from the UK Government mean that starting an office in London for a US company is actually quite easy. The VAT rate is more favourable compared to Nordic countries. And London is a true global business centre and a nice place to have a Centre. We have a lot of really important partners in and around London, chief of which is Symbian, but also Sony Ericsson as well."
I started by asking about some of the decisions made when Handango was launched. In 1999, most of the Software stores were for a single platform. Why Did Handango go down the multi-platform route? "When we started, there wasn’t a huge amount of PDA’s out there, and of course they were spread over multiple platforms. Once you split those up, we didn’t believe that you could build a strong presence by focusing on one very small group of customers. Now of course we have a home for customers, no matter what device they have. Customers don’t really care about the operating system in their phone, just what they can do with it."
Handango and the Marketplace for Applications
A lot of people would say that Handango’s market position allows them to be an aggressive company. Are they? "I think our aggressive growth can be perceived (particularly by developers) as aggressive. But those developers who do know us realise we are serious about the business, the market and about growing the eco-system. I don’t think that’s translated as aggressive. We are a hard working and competitive company."
"Some developers for sure have a negative perception of us, but I’d say that’s inaccurate. One example is the ESD Union, which was unhappy with our jump in commission from 25% to 40%. A lot of that negativity is our fault. We need to do a better job communicating our value to developers, and the kind of things we do for developers that nobody else in the market does. One example of the hundreds of things we do…is when a fraudulent credit card purchase is made, we eat that. We don’t debit a developer’s next payment. We swallow that and take care of all the fees and charge backs from the Credit Card companies."
"Developers don’t see that. They see a single credit card transaction and nothing else. It’s a simplistic view. I can understand why it exists, but it’s wrong. But that leads to this negative perception of Handango."
Handango has seen growth of upwards of roughly 180% per year, over each of the last five years. So as a company, you’re making more money, but at the same time are upping your commission rates. Where does the rate increase go? Couldn’t you just use better business practices and use that money to grow, rather than take more from the developer? Clint leans forward with the trademark ‘that’s an interesting question’ and explains that "the growth figures of 180% per year is a revenue figure, not a gross profit. Around 99% of revenue is Developer sales, so the developers have also seen the same rate of growth. As we’ve grown, we’ve taken the market and the eco-system with us. When we have adjusted margins, it has been out of necessity, and a desire to use those additional funds to grow the market, not grow our profits."
Is the current Dollar exchange rate a problem I wonder? "Not now as we let Developers price their applications in Euros, US Dollars, or UK Sterling on our system. We still only pay out in US Dollars. But we’re rolling out the ability to receive payment in other currencies at some point in 2005."
What does Handango do best? "Ewan, that’s a great question!" (Isn’t it great when you manage to get these guys away from the prepared market speech and into new territories? Clint seems to agree with me). "I think helping small developers grow to become not so small developers. I’ve heard a lot of developers who used to work full time in the day, as they were coding a mobile application in the evening as a hobby. They put it up on Handango and got a few sales. Then they did a bit of marketing, listened to their users, and built another app. Pretty soon they didn’t need their day job. As demand grew, they hired some staff, and now they have a thriving small business - which started with a single application on Handango." Which is very much the classic American Dream.
"There’s a whole series of things that go into that," Clint continues. "Having a simple submission procedure helps – your application is on sale in 24 hours. Having a robust sales channel (for example the All About Symbian Store) to get all the applications out there in the market. Being a responsible business partner, and making sure we pay our developer partners on time is a big thing."
And the worst thing? "We need to communicate more with developer partners. I think the ESD Union is a great example of that. We need to do a better job of helping them understand our side, and then there might not be a need for them. I was in their shoes 5 years ago, and I can see exactly what they are thinking. Handango could do a lot more there."
Of course, finding a developer homepage isn’t as easy as a click on a Handango page. "That’s right," says Clint, "there have been no hyperlinks back to the developer on Handango now for three years. We removed them simply because customers found the applications, and were then going away and purchasing the application from the Developer’s Homepage, which might be using a commerce engine that isn’t powered by Handango. We did all the work and saw none of the return. If I was still a Developer, I’d use Handango for sure, but I’d still have my own homepage. I’d still try to chase other outlets, and I’d still try to get my application in the box. But we are a quick route to market, and it’s a wonderful system we have."
Do you think Handango is killing the art of the Developers Homepage? While there are a lot of big software companies, there are very few websites from single developers. There are many developers out there who are solely using Handango. If Handango is this huge store, is it slowly destroying the ecosystem on the web? "The model of application distribution is changing through wireless devices. When it was just the PDA/Handheld Market, a developer could go direct to the consumer. But in the wireless market [of today] the best route is through the operators. Most application developers who don’t have their own web store have chosen a model that will allow them to go through stores, like Handango, to get to the operators. We’re trying to get more developers to use our shopping basket technology on their own pages. I’d like to see more homepages use that." Of course that still means Handango has a hand in the sale of the application…
What about the End-Users?
Why is Handango so popular with them? "Because Handango offers everything they could possibly want to download for their mobile phone or Handheld. We’ve the biggest and best selection of applications and the convenience of having everything in one place. We have the standard store features, but also some unique innovations such as our rewards program. Once you buy $100 of downloads, you can redeem those points for an additional $10 to spend. Overall, it’s a great experience." Do you want to be an electronic Walmart, with a Handango Store on every site? "Partly yes, but we’re not about lower prices – we’re for the consumer. We’d want to maintain the price integrity in the market value of applications, and not see mass discounting from developers or competitors. We’d rather compete on quality of service and selection."
Who’s our typical Handango user? "Probably a male, in his late 30’s or early 40’s, with a high disposable income. They’d be more technical than the average bear. Generally, more than half of our customers in a four-week period are returning customers. We do have our serial purchasers, and in a survey, we find they budget out a certain amount that they know they will spend per month. Apart from them, the average Handango customer will buy just over two applications a month."
Looking at Symbian OS, Pocket PC, Palm and Java Midlets, which is the most popular platform? Clint deftly dodges the question. "We try to avoid the horse race of which does more and which is more popular. They break down pretty much along the installed base. There isn’t one platform that drastically does better per head. But we find the average Symbian customer buys 18% more software in dollar terms than the ‘average’ customer, and UIQ customers spend 36% more in dollar terms."
What about smartphone owners in South East Asia, who report a lot of problems in trying to buy software from Handango. Is there a reason for that? "In the past, credit card sales from that area have generated a very high number of fraudulent transactions. But it’s a little known Handango feature that there is a Direct Sales Rep they can contact to sort out the purchasing of applications through Handango by contacting email@example.com."
Portals and Partners
Handango have a huge number of portals. For example, Vodafone Live use Handango. How does that work? "The implementations vary. With Vodafone, we supply the content for their Travel and Business sections. Vodafone themselves run the interface and the commerce section. With T-Mobile we run the on device storefront, and a Web Based store. Sprint also bundles a Handango client, Handango InHand, with the Treo 650, so you can buy from a dedicated application."
You’re part of the Symbian Platinum Partner Program. How does this relationship with the Operating System writers help you, when you don’t code yourself. What’s the benefit? "Ewan, let me tell you, that’s a really great question. Symbian is looking at creating an integrated system. Developers are part of that, because if there is a way to make money in Symbian OS, then developers will use the OS to make their programs, and sell them through us. In turn that leads to more Symbian phones being sold, which means more opportunities for the developer to sell more applications. And so on and so on. We’re a key part in helping the developer realise sales of their applications."
"One example, we are working strongly with Symbian over the Symbian Signed issue (a certification program for Symbian applications to ensure quality and adherence to standards – Ewan) to make sure that we can help streamline the process and make it easier for our developers. We’d like to get all the applications that need to be Symbian Signed into the program. And we need to ensure that it’s simple and easy to use. We can work together, with Symbian and the developers, to help make the application process as straightforward as possible."
Symbian Signed does involve a cost to certify applications (roughly $350 per author, and then from $200 per application submission). Are Handango thinking of a way to pay an advance to ‘worthy applications’ which would go directly to help with the costs of the Symbian Signed program? "We’d be interested in anything that helps a vibrant eco-system and delivers value to our shareholders. There’s nothing new I can disclose around Symbian Signing, but we are looking at a number of models to help developers. The certification thing is tricky, because there is a cost involved, but Networks are demanding the certificates. It‘s going to very quickly become a requirement for those channels. The trick is finding a way to minimise that impact."
Are Handango looking at becoming a company that could self-certify applications to reduce the costs? "Yes." Which is the fastest answer out of Clint for the whole interview.
Turning to Nokia’s Preminet, of which Handango is also a partner with. On first look it appears that Nokia are trying to do what you are doing, that is grab as many developers [through Forum Nokia] as possible, get them in to a Nokia content catalogue and sell that to the operators, while taking their own cut from any sales. Are they a competitor? "Yes, a lot of Preminet is just like Handango. We can’t help but think it s a great idea, because it’s what we do. There are competitive parts to it, but we’re a partner of Nokia. We run their American Software Market for them and run many joint ventures with them. We are integrating our catalogue with the Preminet catalogue so Operators can get access to our repository of applications as well as any in Nokia’s catalogue." What’s interesting is that this partnership was decided long before the Preminet announcement, which isn’t the perception given with the release dates of the press release. "We decided with Nokia to release our news after the launch of Preminet. We wanted the news to compliment the launch and not get lost in the initial review and launch of Preminet."
So why should a developer turn to Handango and not Preminet then? (Guess what? "That’s a great question!") "Sort of the same reason they would come through us for online sales. While Preminet will have a number of Operator channels, a developer with Handango could get that access to those same channels through us and our partnership with Preminet, as well as the hundreds of other channels we have.
Clint’s Closing Thought
Handango came online in 1999, fighting the number one store PalmGear. You’re now Number One on the Internet. What about Motricity launching Symbian Gear as the little guy, fighting the new number one… Handango. "I think that speaks about the execution and focus we have. Motricity bringing this up is entirely consistent with their strategy, which pretty much seems to be ‘do what Handango has done’."
Can Clint sum up Handango in ten words? "Ten words? Ewan you said that was the easy question!" There’s a few minutes of throwing some ideas around, because Clint, admirably, doesn’t want to give the standard boiler plate answer. Eventually, Clint comes out with "Handango is the best of everything for smartphones and handhelds."
Clint, it’s been lovely, thanks for your time.
Links of Interest:
The All About Symbian Store (powered by Handango).