There is much anticipation and excitement around the emergence of the app store phenomenon, and many operators are jumping on the bandwagon by creating application stores of their own. At the same time, more device manufacturers such as Nokia and Research In Motion (RIM) also are putting their mark on industry, offering variations of the model pioneered by Apple. Given this flood of players to the applications market, what rollouts ultimately will be the most successful, and how will operators truly be successful playing in this game?
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| Lennartz |
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According to a recent study by Airwide Solutions conducted by mobileSQUARED, which took a look at the success factors associated with mobile app stores, there are some potential pitfalls (especially for operators) in the current mobile app store models, namely: lack of application relevancy, consumer education and increased fragmentation, that could hinder operators from being successful. And, while moving into the app store business offers tremendous opportunities for operators and their partners, the most successful carrier deployments will be those that layer in network intelligence, context and customization to appeal to the subscriber base hungry for mobile applications.
Here’s how they can do it:
While it is vital for operators to embrace the influx of new mobile applications and in turn sell them to their subscribers, instead of copying the app model pioneered by Apple, they will need to first look to and utilize the information they already have, such as subscriber data, to be successful. Open ecosystems, driving revenue from network-enabled messaging and location solutions and opening APIs that enable third-party application developers to integrate their services into an operator’s value-added services (VAS) architecture, will be the keys to opening up a strong revenue stream.
The open source software applicable to smartphones is ideal for app store development, especially considering 100 percent of operators expect their customers to prefer applications that are better suited to them and their preferences, such as applications designed specifically for their device, using their existing location and accounting for their affordability. However, according to Informa Telecoms & Media, smartphones will account for just fewer than 20 percent of the global mobile market by the end of 2009. That would leave 80 percent – or 3.2 billion mobile users – without access to an app store-like experience. Never before has there been a greater need for the mobile industry to ensure one experience can be accessed by all. It is this approach that has the potential to drive hockey-stick growth in revenue streams from VAS.
It is clear that the emergence of the App Store and other similar services from third-party content aggregators, handset OEMs and operators is driving an unprecedented usage of connected applications. When integrated with network-enabled messaging and location solutions, operators can drive additional consumer value from these popular applications and services. This approach is helping to reduce fragmentation and complexity while also providing the additional value that carriers can only realize through seamless integration of services with their messaging architecture. A Juniper report supports this trend, unveiling that the increasing utilization of in-app billing to enable incremental revenues from additional mobile content will see VAS providing the dominant revenue stream by 2011. The report stressed that in the longer term, the greatest benefits to operators would be derived from data revenues associated with app usage rather than from the retail price of apps and content.
Another element that will be central to the success of building a long-term ecosystem for advanced messaging services are open APIs that enable third-party application developers to integrate their services with an operator’s VAS architecture. Truly open APIs for developer communities are on the vendor roadmap for the next 12 months and are likely to drive substantial application-based messaging volumes. The ability for developers to easily connect with new architectures is particularly important given the complexity of the legacy operator environment. Existing systems are composed of numerous components, often with a variety of proprietary and standards-based protocols, or duplicated hardware. Integrating new technology or applications with this complex environment is a huge challenge. Therefore, future network upgrades must take account of this fact. Indeed, it is a modular approach to developing legacy systems that will both reduce this complexity and also enable operators to squeeze the most value out of earlier investments.
There is a clear consumer demand for this centralized content and services solution. This means for mobile operators intent on driving ARPU, deploying an app store-like offering is the ideal solution of delivering content and services targeting the broad mobile demographic. It is a strategy that guarantees the operator flexibility and the timeliness to respond to changing market and consumer requirements and demands. A network-based solution using common APIs overcomes the pitfall of device and OS fragmentation and ensures that mobile operators will play a pivotal role in delivering app stores to the mass market to consumers without high-end devices and smartphones. More importantly, operators will not be disintermediated from the content and services value chain.
App store proliferation is by no means done and expect to see even more players and variations on the model to be introduced later this year and into 2010. One thing is certain: Carriers can and must have a integral role the adoption of mobile applications, and their technology investments need to take their future direction into serious consideration. Get ready for a wild ride.
Lennartz is vice president of product marketing at Airwide Solutions.