There’s a battle brewing over the unremarkable few inches of real estate at the bottom of every mobile screen: the keyboard.
Mobile devices have come to be dominated by a handful of apps owned by tech behemoths like Facebook and Google, leaving competitors with few ways to gain users’ attention. That’s why a plethora of app makers, ranging from titans like Microsoft to startups like Giphy, are vying for screen time with users by releasing their own novel takes on the omnipresent input device. “If there is one application you use more than Facebook or WhatsApp today, it’s your keyboard,” says Daniel Peled, a founder of Israel-based startup PayKey. “It’s the gateway to everything you do on your mobile device.”
The battle for apps is over
Smartphone users spend half their device time in their most used app, according to ComScore’s 2015 US Mobile App Report, while the top five apps account for 88% of smartphone usage time. The numbers are even higher for tablets. Here’s what that looks like charted:
What are those top apps? For most people, it’s Facebook. ComScore found that nearly half of users had Facebook as their most used app, and 89% of users had Facebook within their top five apps.
As for the other most popular apps, two of the top five are owned by Facebook, while the rest are Google properties.
Keyboards and chat platforms
App maker PayKey has its sights set on the valuable real estate left over on phones. The firm makes an app that transforms users’ keyboards into an instant money-transfer app. Users can send funds to others by pressing a dollar-sign button located next to the spacebar.
Peled isn’t going straight to the consumer with PayKey. Instead, he wants to sell it to banks as a white label solution for existing online banking apps. If a bank integrates its app with PayKey, its money sending-keyboard will become available to the user. The user can then pull up that keyboard when sending a text message, for example, to initiate fund transfer.
There’s another reason PayKey’s going after the keyboard space. It doesn’t have to depend on the chat platforms to gain access to potential users. “Keyboards are unique because you don’t need a partnership with the social apps,” says Peled. “If you build around APIs [from the social apps], you are dependent on them.”
Peled says banks have an appetite for a solution like his because it lets them maintain their brand and provide in-demand functions like money transfer with little friction. He says PayKey has a pilot planned and a commercial agreement in place with top-tier banks in Europe and the US, but can’t name them because of non-disclosure agreements.
Some app makers, like Giphy, are happy to take their chances partnering with the giant social networks. The search engine for animated gifs built its userbase by integrating with platforms like Facebook Messenger, Telegram, Slack, and Twitter. Users of those platforms could access gifs hosted by Giphy, and others, by tapping a button provided by the platform owners.
That’s worked out pretty well for Giphy, which is said to be worth $300 million after its last funding round in February. The company says it has served half a trillion gifs in its three years of existence. But it also changed tack this month when it launched Giphy Keys, a keyboard app.
David Rosenberg, Giphy’s business development director, says its Keys app is just a small part of its strategy to get its animations into the hands of users. Its primary focus is still fixed on getting its gif search engine embedded into various chat platforms. Still, the keyboard app gives the firm a new way of reaching its users directly without having to rely on playing nice with the dominant chat apps. “We’re confident that there are areas for smart product thinkers to build healthy user bases outside of these top-tier apps,” Rosenberg says.
Big moves by tech titans
Fighting for user attention through the keyboard isn’t just the preserve of scrappy startups. Microsoft has made major moves in the space. In February it acquired a startup called SwiftKey, one of the most popular third-party keyboard makers, for $250 million. That netted the Redmond giant 300 million new users. The goal is to integrate SwiftKey’s AI-powered word-predicting technology into Microsoft’s existing research in this area.
Less than three months later, Microsoft released a keyboard app called Word Flow for iOS, which garnered largely positive reviews. The SwiftKey acquisition and the Word Flow app were important tactics for Microsoft to stay competitive in the mobile space. An engaging keyboard app would give it a clever way back on to users’ screens. “They’re definitely playing catch-up and they’re trying to get in on a few of these mobile trends,” says Wes McCabe, an analyst at Sensor Tower, which provides app analytics.
Earlier this month, Google followed suit with its own keyboard app, Gboard. The app’s key feature is an embedded search bar which lets users obtain search results without leaving their messaging screen. Google’s already dominant in the mobile app space, but Gboard was a nod to the importance of having its search bar available in an increasingly competitive bit of the mobile user experience.
Looking for a hit
Keyboard app makers haven’t cracked the code for user engagement yet. According to Sensor Tower, keyboard apps as a whole appear to benefit from a novelty factor. Downloads spike when a major new app is released, but weekly downloads tend to slip relatively soon after initial interest. “They’re struggling to gain traction,” says McCabe. “They follow the early adopter tech trend, where folks are hopping on these trends early, but [the level of downloads] are not sustainable, and no one keyboard has dominated.”
Keyboard app downloads spiked, for example, when Apple first allowed third-party keyboards to be installed on iOS devices in 2014. But then downloads fell steeply, declining for much of the next year. The next spike, in May 2016, occurred when Google released Gboard, which again suffered from a lack of sustained installs. It was downloaded more than 250,000 times in the US on its second day in the App Store. That has now dropped to between 7,000 and 10,000 installs a day, according to Sensor Tower data.
Weekly downloads for keyboard apps represent less than 10% of all downloads in the “Utilities” category on iOS, Sensor Tower data shows, but the keyboard space presents a huge opportunity for the right app. There were 2.6 billion smartphones in use in 2014, mobile operator trade group GSMA (pdf) reports, with that number forecast to hit 5.9 billion in 2020. That could mean 6 billion screens dominated by chat and video apps controlled by Facebook and Google. But every one of those devices will still need keyboards to type on, no matter what the app.