Date
20 October 2018
The Hong Kong government’s funding assistance for development of an AI-based app for Baduanjin qigong exercise program has sparked a debate on valuation issues surrounding mobile apps. Photo: Reuters
The Hong Kong government’s funding assistance for development of an AI-based app for Baduanjin qigong exercise program has sparked a debate on valuation issues surrounding mobile apps. Photo: Reuters

Innopage founder on how to valuate an app

What is a good way to estimate the value of an app?

Well, it’s topic that has stirred much debate and a lot of different viewpoints, as well as raised several related questions.

Recently mobile games publisher Animoca Brands partnered with an NGO to produce an Artificial Intelligence-based app for Baduanjin qigong exercise program. The initiative was aided by a grant of HK$4.5 million from the Hong Kong government’s Innovation & Technology Fund for Better Living.

However, the funding has faced questions, with some observers suggesting that it overvalued the app development cost, while other argued that the app provides value for money with its community features to reduce elderly loneliness in the city.

The Hong Kong Economic Journal recently sat down with Keith Li, co-founder and CEO of Innopage, a mobile applications development startup, to discuss issues related to the valuation and expense of developing an AI-powered app.

Excerpts from the interview:

HKEJ: There has been a heated debate about a Baduanjin qigong app which, the developer claims, will use artificial intelligence and machine learning to guide users in executing the moves. Can it replace a human coach?

Li: From what I understand, the app leverages AI capabilities and analyses the user’s movements. By tracking the user’s learning progress, it can provide suitable and personalized guidance. There are many universities and institutions deploying AI and performance analytics for coaching to improve users’ exercise routines.

Q: Many application developers are seeking government funding to finance their app projects. In these government-funded projects, who would own the copyright and patent for the app?

A: If we look at the guidelines for the Hong Kong government’s Innovation & Technology Fund for Better Living, there seems not to be a clear-cut distinction of copyright and patent ownership for the application. Considering that these are in fact public funds, I believe if private businesses are involved in developing the projects financed, the government should state clearly on paper beforehand that the copyright ownership of the app does not belong to the app developers.

Q: The funding has sparked a heated debate with some saying it is too expensive for developing an app like this. What do you think?

A: On one hand, unlimited users can download the app, which, theoretically, helps promote China’s Baduanjin qigong exercise at home and abroad. But on the other hand, we should note that the AI-based app requires a mobile device camera to provide a real-time feed of the user carrying out the exercise for AI tracking and analysis. However, can this AI-powered recognition and tracking feature also work fine for lower-end smartphones, which the majority of the elderly population is using? This would be a question for the wide acceptance of the app.

Q: Taking all factors into account, do you think this app is worth the HK$4.5 million grant from the government?

A: Before making a conclusion, I think we need to consider this: what’s the aim of the mobile app? And is the mobile app the right and only solution for the issue?

Q: In general, how can we estimate app development cost?

A: To make an app, we need a team consisting of experienced app development specialists and new developers. And their pay varies considerably.

Besides, if there are technologies in the app which have existed in the market, the developer may ‘rent’ these technologies with a copyright fee. By doing so, the app development cycle can be shortened and some of the cost would be saved.

In contrast, if the developer puts all the funding into creating new technologies, that poses a higher risk of loss as the app may eventually fail to go to market.

This article appeared in the Hong Kong Economic Journal on May 18

Translation by Ben Ng

[Chinese version 中文版]

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BN/RC

Hong Kong Economic Journal

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