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The Great App Store Tug-of-War

neil shah
March 25, 2010

Neil Shah is an experienced Business and Technical Professional, Consultant, and Industry Analyst.

Mobile handset industry growth was flat in 2009 at nearly 1.14 billion devices in sales, but the silver lining was the smartphone category which grew to nearly 174 million devices from a base of 139 devices, contributing to approximately 15% of the total handset sales . Smartphones will continue to grow with a year on year compounded growth of 24% with almost 30% YOY growth as of last year. Smartphone operating systems and their compelling user experience are the differentiating factor. Recently, at the GSMA Mobile World Congress in Barcelona some of the world’s largest MNOs have unified themselves behind the idea of a single platform “Wholesale Applications Community” where mobile application developers will be able to flock in and develop applications for what will theoretically be the largest app store in the world serving a broad range of mobile subscribers.

This standardization of APIs across the participating MNOs and BONDI is a key step towards an (OMTP) Open Mobile Terminal Platform representing not only the operators but also the complete mobile value chain i.e. handset manufacturers, chip makers, content providers and OS, software developers. We have seen the growth of internet on mobile terminals from WAP model to finally the real internet browsing using Opera, IE, S60, Opera, Safari browser now available on these smart phones. These applications will primarily be web browser based apps and widgets. So, from the developers’ point of view, developing applications working with only one SDK involving HTML5 and JavaScript standards will help avoid costly development for different mobile OS platforms and at the same time allow them to sell their apps to a broader range of content hungry mobile subscribers.

The currently popular and easily available device-based apps provide seamless access and a compelling user experience with a deeper integration, but at the same time possess a bigger challenge for the developers in building and customizing their app for each different operating system platform and device out there. Whereas the network centric (web browser based) widgets and applications require minimal customization for different platforms/devices with an ability to roll out quickly and achieve scale. With web based apps, the challenge is deeper integration, navigation, human computer interaction and the authentication methods. With huge support from the developer community, industry players and w3 standardization, OMTP is definitely on the road to develop and promote the web based apps and widgets successfully.

The other primary advantage of the web based app model is to the operators who will earn 30% of the total revenues generated from these apps. It could also be advantageous to the mobile advertising community to spread its reach more effectively with easy integration with the HTML/JavaScript based powerful advertising. From the user perspective it will definitely be cheaper compared to the mobile based apps and they won’t have the trouble of syncing and preserving the information on apps on the device with an added advantage of secured personal information in case the phone is lost. The other boost will be in the areas of the most popular smartphone user engagement categories i.e. online gaming, social networking, location based services and multimedia content access.

So with open mobile getting a green signal, we shall now witness a tug-of-war between operators and the device manufacturers for grabbing app revenues. Will network-based apps or mobile-based apps prevail?

Neil Shah specializes in Wireless Mobile Communications Technologies, all facets of Business Strategies, Interactive Marketing and Market Research domains. He is a Certified Wireless Professional with Masters in Telecommunications & Business Management from the reputed University of Maryland, College Park, USA and Bachelors in Electronics Engineering from University of Mumbai, India. His rich multifunctional experience covers a wide spectrum of technical and management functions from consumer electronics, high technology, education to telecommunications. Follow him on twitter as @NeilTwitz.

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