Mobile applications — or "apps" — are increasingly seen as the next must-have element of a company’s "virtual storefront," much like the corporate homepage was 15 years ago. Consider: Apple recently announced that the number of iPhone applications available through their iTunes store had surpassed 300,000 — with a growing number alleged to actually have functionality that extends beyond testing whether your friend’s cat would be compatible with yours. And there’s no shortage of small developer outfits willing to program the customized corporate-branded apps that are, we are told, essential to remain relevant to your customers.

Developing and publishing a customized branded application poses a unique set of challenges if your organization’s core skillset runs outside of writing computer programs for telephones. Once you’ve found a developer working out of a reputable-looking garage to build your custom app, a number of issues may arise at the contracting stage that vendors and clients need to consider. This article examines some of those common recurring issues.

So Many Platforms

To maximize the audience for your new app, it should be compatible with as many of the hundreds of mobile phone models on the market as possible. Unlike websites (which usually require only relatively minor design changes to account for different browsers), the same app running on different mobile platforms usually needs to be re-designed from the ground-up each time. You can cover big parts of the market by making versions of your app available for the iPhone® or BlackBerry® platforms. Smartphones running the Android™ platform come in at a strong third place among users and Microsoft is expected to make a big push this year with its Windows Mobile 7 operating system. Each of these platforms have had different adoption rates with different demographics, so knowing your customers can also help you narrow the scope of your offerings.

Maintaining and supporting your application on all of these platforms can be expensive and there’s usually no guarantee from manufacturers that what was compatible on this year’s phone will operate on next year’s devices with the latest features. Developers will typically charge ongoing maintenance and support costs on their apps at rates that can be higher than what purchasers of traditional software may be used to. A sensible approach some clients have taken is to first launch the app on one platform (usually BlackBerry® or iPhone®), but contract ahead of time for what it would cost to expand to other devices. Companies shouldn’t feel pressured to offer the most feature-heavy applications right away — contingencies for new features can also be negotiated in advance for businesses that want to see how much their customers use their app before devoting too many resources to it. Similarly, companies can limit the scope of their apps to a single division or product line and look to expand the functionality later if it catches on.

The Next Big Thing

Like web developers in the late 1990s, most custom app developers are relatively new. This can bring some interesting opportunities for clients, but it also creates certain risks that should be mitigated as much as possible. From an opportunities perspective, smaller development firms are always trying to land a big name client, so letting the developer place your esteemed logo on their website or acting as an active reference for them can often be leveraged against significant pricing gains. Going with a smaller development firm can also produce a unique product for companies looking to distinguish themselves from the cookie-cutter approach to mobile apps some brands have taken.

However, one big risk of using a lesser-known outfit to build and host your app is that you could find yourself with an unsupported (or worse, unhosted) app at any time. Developer startups are famous for disappearing with little notice, sometimes due to that sought-after buyout or more often simply because their families decided they needed that garage space after all. If you’ve entered into an arrangement where the app developer is also hosting the back-end operation of the program, having an effective escrow arrangement in place that allows you to quickly switch to a different host in the event of the developer’s dissolution is absolutely vital to ensure uninterrupted service. Even if you fully own and retain all the source code to the app that’s been developed, it’s still a good idea to ensure that any remaining code, materials or documentation can be quickly obtained from the defunct outfit to ensure continuity of support services.

Privacy Matters

Think of the amount of personal or sensitive information a typical smartphone user keeps on their phone: e-mails, contact lists, calendars, photos, even banking and medical information. Any application installed on that device could potentially have access to all of that information and this raises a number of privacy matters. When your customers install an app with your company’s name and logo, they are implicitly trusting you to adequately safeguard the sensitive information they keep on their phones. Breaching that trust can harm a company’s reputation in addition to posing legal risks. Privacy protections need to work both ways: not only should mobile applications be limiting the amount of personal information that they collect from users, they should also be safeguarding and limiting the disclosure of any additional sensitive information obtained through the use of the app. If you plan on hiring someone to develop your company’s branded mobile application, ensure they understand from the get-go the importance of safeguarding your customers’ information.

When it comes to privacy matters, user consent should always be the first consideration. Users of your mobile application should be aware of, and explicitly accept during installation, how the app collects, uses and discloses their personal information. While there have been a couple of apps that have "gone viral" by going through a user’s contact list upon installation and sending out personalized "recommendations" to all of the unsuspecting user’s contacts, this is not an advisable strategy nor one that has ever worked in the long run. Recently enacted anti-spam and anti-spyware legislation in Canada may also create additional consent requirements upon installation of any software for smartphones that both vendors and clients need to take into account.

In the next instalment in this series, we’ll consider some further legal issues that app developers and those that hire them should consider like trade-mark usage, data protection and some warranties and representations unique to the mobile space.