5 Reasons API Providers Should Consider Building Their Own Applications

Patricio Robles
Apr. 28 2014, 08:31PM EDT

With APIs becoming more and more prominent, a growing number of companies are finding success with API-only or API-centric offerings. So is building customer-facing applications a thing of the past? While there is good reason to believe that the trend toward API-focused companies will continue and even accelerate, there are still virtues to building end-to-end solutions. Here are five reasons API-centric companies might want to consider building their own customer-facing applications.

1. To bolster sales, marketing and business development.

With seemingly countless APIs and more launching every week, it's more important than ever for companies to effectively convey the value of the APIs they bring to market, and one of the best ways to get third parties interested in an API is to show them what can be done with it. That was the case for OneRoof Energy. Earlier this year, the solar services provider launched an API that gives its partners the ability to access the data they had previously accessed through the company's web-based portal. Instead of simply launching the API, however, OneRoof Energy also built its own iOS and Android apps on top of its API, and they have proved to be a useful business development asset. "We often use [the apps] when talking to partners about integrating with us and provide it as a use case for them," said Hussein Yahfoufi, OneRoof Energy's VP of technology and corporate services.

2. To capitalize on untapped market opportunities.

APIs may be taking over the world, but for some companies, there may be untapped market opportunities that call for the development of complete customer-facing applications that sit on top of their APIs. Image optimization service Kraken.io's core offering has been an API, but to demonstrate its capabilities, the company has always offered a web-based interface through which prospective customers could quickly test its wares. As Kraken.io CEO Karim Salman explained, "To our surprise, people were signing up for our API plans thinking they would be getting ... access to a web interface with an increased file size allowance." To capitalize on the demand, Kraken.io added a full-fledged web interface for customers. Salman says this was a "quick win" for his business and as an added bonus gave Kraken.io the ability to serve "nontechnical customers" who weren't going to integrate with an API anyway. The strategy appears to be working: Salman says that about half of his customers integrate their own applications with his company's API, and the other half now consume the API through Kraken.io's web interface.

Some of the most common concerns API-centric companies have in launching end-to-end solutions are around cannibalization. These concerns may be legitimate and were not lost on Kraken.io. But according to Salman, they ultimately proved to be less worrisome than first thought. "I do not really see that [our] interface would significantly cannibalize the uptake of our API – they are two very different offerings" that target two very different types of customers, he told me.

3. To take advantage of market expertise.

In some instances, an API provider will develop an end-to-end solution to capitalize on opportunities in underserved markets. In others, an API provider may conclude that it is the only entity capable of serving certain markets. Take markets like finance. Some of them are starting to boom, but the complexities and demands of these markets may mean that some API providers are going to be better equipped to build full solutions than third parties that may not have the same level of market expertise.

4. To maximize revenue.

Pure-play API companies like Twilio and Stripe are proving that valuable businesses can be built with an API-as-a-product. But not every company will find that its API is best for business. Take Twitter. When Twitter launched its API, it encouraged developers to build all sorts of applications on top of its open platform. This included clients through which Twitter's users could interact with the service. As Twitter matured, however, and an advertising-based revenue model came into focus, it became clear that Twitter could not build the business it wanted unless it controlled the user experience. Third-party clients built on Twitter's API were standing in the way, and Twitter was forced to push them out to ensure that it could reach its users directly.

5. To address lack of API traction.

While adoption of API-based services continues to grow rapidly, not every company can thrive with just an API. Competition is fierce, standing out can be difficult, and some markets are adopting APIs at slower rates than others. For some companies, lack of traction with an API doesn't mean that there is no opportunity. Instead, by using their own APIs to build complete solutions, some companies that might have failed with an API alone may be able to salvage their investment and build a successful business.

Patricio Robles Follow me on Google+

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