In the past few weeks we are starting to see a consolidation trend in the mobile market. First, Facebook buys photo-sharing app Instagram. Now, Evernote buys Penultimate. If you are unaware, Penultimate is a notepad app that works like a regular notebook, meaning with a pen or finger. It is a very well done app but is limited by existing pen-on-iPad technology, like every other handwriting-oriented app.

The purchase by Evernote makes sense. More notes feeding into Evernote plus the ability to add pen input to Evernote itself without reinventing the wheel. Evernote adds something to Penultimate, too, since Evernote has OCR technology built in so hypothetically it can make your handwritten text searchable. [1]

I believe we are at the beginning of a consolidation tipping point in mobile apps. In the early days of the PC there were hundreds of companies writing software. A decade later only a few major companies remained. I think the same is true here. There are too many apps chasing too few dollars.

Right now those purchases seem to be strategic. But I won’t be surprised to hear about a well-financed company buying up multiple apps and consolidating them into a BigCo that can generate BigCo-type dollars.

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[1] I say hypothetical because handwriting can be really sloppy and might be very difficult to discern exactly what is written.

One of the more ridiculous fallacies that have been floating around the mobile world is that the number of apps available for a platform will dictate the winner. I am hearing this once again as RIM shows off a prototype of their new BlackBerry 10 devices yesterday and kind of guaranteed $10,000 to developers that write apps for it. At the same time, Microsoft announced over 80,000 apps available for Windows Phone 7.

So, to remind everyone why apps doesn’t matter, I’d like to point you to exhibit A. In 2007, Apple’s iPhone had zero apps available for it.

When iPhone launched Microsoft’ Windows Mobile platform, Palm’s operating system and RIM’s Blackberry devices had well over a hundred thousand apps available for them combined. And Apple had zero. Yet here we are five years later and those three companies combined have less than 10% market share (with one of them not even in business anymore) and Apple is either #1 or #2 in the US and the world [1].

How is it possible that Apple won? For all we have heard in the past few years, it is the one with the most apps that wins!

It has nothing to do with which device has the most apps. It has everything to do with the value proposition right out of the box. Apple’s value proposition was different and clear: phone, iPod and incredible browser all in one package.

So tell me? What is Microsoft’s device differentiating value-proposition? What’s RIM’s? … Crickets. The answer is there isn’t one.

Android, at least, had one. Android’s phone differentiating value proposition was that it wasn’t iPhone. This meant all kinds of things to all kinds of people. To Verizon, Sprint and T-Mobile it meant a smartphone that had similar customer benefits to iPhone but ran on their networks. To the technorati it was “open” to Apple’s “closed”. To most buying customers it meant “cheap knockoff,” like Gucci handbags on New York street corners, or in many cases it meant “phone” because feature phones have mostly gone away [2].

Again… RIM? Microsoft? There is no differentiating value proposition. And that’s why your market share numbers are in the low single digits, not because you don’t have enough apps.

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[1] And, more importantly, #1 in the world in profit share, what I consider much more important for the long-term viability of the platform.

[2] Google, by the way, this is why Android has no tablet market share. You have no value proposition in this segment at all.