Joining the App Store Bandwagon

Mobile applications are the add-on software for the wireless handheld devices such as smartphones and personal digital assistants (PDA). Among the most popular are games, social networking, maps, news, business, and weather and travel information. Mobile application vendors are now playing a crucial role in the global wireless market. As the networks are carrying more and more data minutes and telcos are building profitable business model around the value added services, it has become all the more important to assess the true potential of the mobile applications market.

According to wireless expert report, the global mobile application market including games is worth $ 4.66 billion in 2009 and will jump to $16.60 billion by 2013. The smart phone market is expected to surge 30% by 2013, approaching 1.6 billion users with sales expected to increase from 165.2 million in 2009 to 422.96 million in 2013. 

If we look at the key players involved in the mobile applications market, we see a high degree of collaboration amongst Handset manufacturers, mobile network operators and suppliers of mobile operating systems over each other. Mobile Application Stores (MAS) are a new solution market which promises the development of a new revenue stream for operators, handset OEMs and application developers.

There are primarily three different kinds of mobile app stores:

Operator Portals, e.g. Airtel Live – these type of stores are owned and managed by the operator and have an inherent advantage of having the direct billing to consumer facility. Operators have been offering content and applications on their appstores for most of the last decade. The developers need to tieup with the operator and the operator takes over the responsibility of marketing, distribution and billing. However, in most of the cases, barring Japan, the revenue share is highly skewed in favor of the operator. In Japan, close to 90% of revenues are shared with the developer which is a big incentive for the developers to develop quality applications

3rd Party Store Fronts, e.g. GetJar – These appstores are owned and managed by third party. Users access these 3rd party application stores over the open internet which supports a large number of platforms and devices. The developer gets a high revenue share but marketing and visibility is a concern in this model. Unlike the operator portal or the device stores, the store does not have direct visibility to the users and hence the users have to search for these stores

Platform Application Stores, e.g. Ovi Store, Android Market – These appstores are primarily built by the device vendors and the operating system vendors. The biggest advantage is that the stores are embedded into the device and hence the discovery is simple. Moreover, they can target a large user base due to the volumes each device vendor does. This high volume potential is a big draw for the developers. Apple has also started the trend of sharing up to 70% of net revenues with the developers which means the developers are in demand like never before. The platforms can be proprietary (e.g. Apple) or open system (e.g. Symbian, Android). The trend in the recent times is towards a more open ecosystem. 

Source: ITU

Recently Google Android has struck an alliance with Open Handset Alliance that has committed to launch the former’s device, so far only HTC has released such handsets--the G1 and Magic.If we look at the Indian scenario, all the major mobile operators have joined the bandwagon and have opened up their own appstores to woo their costumers and generate fresh revenue streams.