Learning to embrace the mobile application developer

sponsored by: Alcatel-Lucent

It seems like everyone has jumped in the mobile apps business. Thanks to the popularity of apps on the iPhone, a host of operators, vendors and operating system providers have gotten into the game to replicate the iPhone experience and revenues that come along with it. As a result, a plethora of application-development business models have emerged, making the entire development and distribution process complex and fragmented for operators and developers alike as they look to appeal to a wide range of mobile users.

Indeed, the Apple iPhone created a standardized environment for the largest engaged customer base on a single device. Other platforms such as Google's Android are looking to replicate the app store phenomenon. But app stores and associated revenue for the Operator have come with strings: Operators have had to loosen their grip on the customer as these platforms allow customers to directly purchase data applications from third parties, bypassing the operator altogether.

The iPhone and those devices running the Google Android platform are attracting developers in droves by offering standardized tools to enable new and innovative applications faster and at lower cost. The net result has almost been an end to operator-dominated apps development and distribution as third parties take their apps directly to the consumer.

While the app phenomenon has been a boon to operators in the form of increased data revenues resulting from consumers flocking to higher end devices and higher priced data plans. Operators are realizing they want more. As operators continually invest in mobile infrastructure to support higher bandwidth applications, their ability to recoup those investments from voice and data alone is questionable. They need to find a way to get a bigger piece of the app craze. 

As such, operators are once again looking to play a leadership role in application development and distribution. The timing may be just right as the consumer market is excited about apps, smart phones are becoming mainstream and developers are increasingly interested in jumping into the mobile sector. Operators understand that by instituting a solid applications strategy, they can derive new value out of their networks and differentiate their services in a market that is swimming in new apps.

When it comes to embracing Developers and making them part of a robust applications strategy, “There are some lessons learned from Apple that can be applied else where”, said Patricia Hargil, head of strategic programs with Alcatel-Lucent. "Developers like Apple because of their ability to reach a broad group of engaged customers,” she said. That declaration is based on an in-depth survey Alcatel-Lucent conducted of developers and the challenges they face when creating and distributing apps.

"There wasn't any other platform via middleware or a content aggregator that had the same popularity" as Apple, Hargil said. "What makes Apple more interesting to them? The ability to develop apps  and port them for multiple devices and service providers. Besides, we have found that when the end user experience is really wonderful, that has a tremendous impact in terms of both end user adoption and revenues."

Another way that Operators can use the boom in the applications market to create additional value from their networks, is to expose their network assets--such as QoS and location—via API’s so developers can take advantage of network capabilities only operators can provide.

To establish a leadership role, many operators are working to facilitate the creation and management of developer programs and application distribution. This approach shows progress and allows operators to work closely with developers to help them create apps that leverage the network's capabilities. Operators will need to further look into processes that result in slower times to market and shuts out smaller developers, Hargil said. According to Alcatel-Lucent's research, 70 percent of operators launch less that 5 applications per month. The ones working with developers have launched significantly more.

Apple launched an average of 5,400 apps per month in the middle of 2009 but programs that employ a tightly controlled or customized approach to onboarding third-party applications translates into difficulty in porting apps to various devices, high upfront investments, lack of scale and restricted access to some phone and network features, Hargil said. That means only the largest developers have the resources to play directly in these programs. 

To help Operators sort through the complex applications environment, Alcatel-Lucent has identified up to six different models in all by which operators interact with developers. One of the primary models, the aggregator-centric approach, leverages the expertise and services of aggregator partners to drive development and distribution. While this type of approach takes out much of the burden off of the operator, operators give up some level of control over differentiating service features.

Meanwhile, operators aren't just incorporating one model. Wholesale models are typically employed among other models to serve applications to their business partners, particularly when it comes to M2M applications. Trusted business partner models are also used to offer niche services, such as mobile VoIP offerings, and are typically controlled by the operator but draw upon the partner's customer base.

Yet all of these approaches have one thing on common: they are testing ways to embrace a new pace of innovation in the value chain

Hargil noted that these opportunities and limitations haven't gone unnoticed by operators. "We have helped many of our customers in economically justifying the benefits of exposure of capabilities, a more rapid onboarding of apps and improvements on internal practices to speed up and capture the value of service innovation" she said.