Press Coverage

Building on the App Store Phenomenon

The iPhone and Apple’s App Store have fundamentally changed the game for the mobile industry. By combining an intuitive user interface with a world of clever, entertaining and useful applications, Apple created a compelling proposition for mobile data services that is now the benchmark for the mobile industry.

In the wake of Apple’s overwhelming success, handset manufacturers, mobile operators and OS vendors are now following suit in an attempt to capitalize on growing consumer demand for mobile Internet services. But as handset and OS vendors move into this space, there are question marks over whether they are best placed to deliver the compelling proposition that Apple has so successfully created.

Analysts Eden Zoller and Michele Mackenzie at research firm Ovum clearly explained the challenges they will face when they pointed out that deploying an app store is about creating a whole ecosystem to support, develop and provision apps both online and at the device level, including discovery. For traditional handset and OS vendors, this would require a significant shift in their business model.

If handset and OS vendors face an uphill struggle as they try to reinvent their business models, then who within the mobile value chain is best placed to capitalize on consumer demand for mobile Internet services and applications?

One could argue, mobile operators themselves – as from one perspective, they have no choice. By not offering value-added services and a rich and personalized environment for their customers, they cede that and the revenue-generating potential it offers to other providers and in the process, commoditize themselves as bit pipes.

But more importantly, mobile operators have the background to do it as they’re the only industry player that can manage the customer lifecycle covering acquisition of device, acquisition of services, payment, removal of services and migration to a new device, which theoretically puts them in the perfect position to deliver application stores. That said, for mobile operators’ application stores to be successful, they will need to deliver an intuitive, compelling and consistent user experience.

Fortunately for the operators, this plays to their advantage. With influence over device specifications in many markets, mobile operators can ensure that their application store has great discoverability. This could take the form of idle/homescreen access or be delivered via a softkey, but either way it is a critical element of the overall user experience.

Mobile operators are also in the optimum position to deliver excellent personalization and recommendation services. With a wealth of customer data that is unrivalled by any other constituent within the mobile value chain, they can fulfill increasing consumer demand for customized services that is so clearly demonstrated by the incredible number of applications available in Apple’s App Store.

Also, to ensure that the rapidly expanding range of mobile applications/services and access methods doesn’t start to overwhelm consumers, the industry is also going to have to take a careful look at how a consistent user experience can be achieved across all devices. Right now there are eight major platforms vying for mind share among mobile consumers: Microsoft, Apple iPhone, Nokia-Symbian, Java, BREW (Qualcomm), LiMo, RIM (BlackBerry) and let’s not forget Google Android. To compound the complications, these platforms run across an incredible range of devices, many of which are less well supported by third-party developers.

Only the mobile operator is in a position to offer consumers the choice of any of these environments across the plethora of devices and platforms available today. This is a powerful proposition, as by being able to consistently provide an intuitive and compelling user experience, mobile operators can not only eliminate any complexity by bridging the platform divide but also build brand loyalty and encourage service creation.

This last point is very important to the breadth of choice available to consumers, as a cross-platform world provides a greater incentive for developers, as they know that their designs will quickly reach the broadest possible audience. One way that operators can achieve this is through a platform-independent widget framework that enables them to offer services across devices which are less well supported by third-party developers and in turn, expand the target market for developers.

Finally, from a more practical standpoint, the mobile operators’ billing and network infrastructure should not be overlooked. By integrating this infrastructure with its app store, the mobile operator will be able to carefully manage the user experience by leveraging insightful business intelligence into the use of mobile applications and service offerings.

So, while the winners and losers have yet to be determined, it is clear that the next wave of mobile functionality is here, with research firm In-Stat predicting that there will be more than 100 million app store users by 2014. What’s more, as the competitive field shapes up with new and established players, mobile operators realize that they can compete and differentiate their proposition, building on consumer demand for a broad choice of applications and a compelling experience on their devices. By leveraging all their assets of brand, pricing, customer service and device range, mobile operators can provide a compelling mobile application store experience to their subscribers and compete with the device OEMs and platform vendors.

Written by: Dave Evans - Chief Technology Officer for mobile Internet platform provider SurfKitchen.