How operators can capitalize on the apps craze

sponsored by: Alcatel-Lucent

Mobile operators, in a bid to take back control in the applications business, may have instead made application development more complex for the developers they are trying to recruit.

Operators know they must find ways to begin capitalizing on the apps craze as gaining revenues from data and voice plans won't make up for the cost of building out more capacity in their mobile broadband networks. But fragmentation has occurred in the operator community as a plethora of application development models have emerged--operator-led, aggregator-centric, wholesale and trusted business partners--to name a few.

The result has been a slow apps on boarding process for operators and a shut out of certain developers that are forced to pick and choose which programs they participate.

But what if developers could write an application once that cannot only run on any device and network but also leverages key mobile network assets; such as network condition and network type that can't be easily accessed by third-party developers today? And what if operators could quickly select applications from an aggregated, cross platform list that would be compelling for their customers while also offering robust monetization benefits?

A recently introduced suite of solutions from Alcatel-Lucent actually brings both operators and developers to the top of the lucrative app business food chain. Open API Service brings developers and operators together to support the rapid creation and secure testing of new services, allowing developers to leverage enablers from multiple operators in one place--and with a single API call. This eliminates the need to establish individual relationships with operators and provides the cross-operator advantage of reaching a larger potential customer base, said Laura Merling, vice president of Alcatel-Lucent's global developer platform. Operators in turn eliminate the expense of registering, provisioning and supporting individual developers.

The service not only brings developers and operators together, but also addresses other fragmentation problems arising from the growing number of app stores, Merling said.

"As a developer, if I have to go through the process of using different metadata requirements and application updates, I'm not going to choose to target 40 different app stores. I'm going to choose three," Merling said. "If I'm rolling out an app with the Open API Service, then I can go and get it tested and standardized and push it to all of the different app stores."

Merling predicts that such a capability will give rise to even more sophisticated app stores from niche players like automotive companies and retailers that are targeting specific mobile users.

The launch of Alcatel-Lucent's Application Exposure Suite allows operators to make assets in their networks available to application and content providers via a secure exposure layer, not only giving developers the opportunity for differentiation but allowing operators to share a bigger chunk of the revenues. Operators have the ability to monetize their capabilities by enabling developers to easily gain access to functionalities such as billing, location or connection optimization.

Alcatel-Lucent is also addressing the pricing structure between apps providers and operators through the introduction of commercially bundled APIs and an associated revenue sharing model that eliminates upfront costs for developers.

"Developers' biggest challenge is the fact that existing aggregation models have been prepay," Merling said. "Developers might have to commit to $8,000 per month before their applications are even delivered. It turns into a vicious cycle."

This bundled API concept blends operator and third-party application capabilities to enable a new revenue share model that furthers the concept of unlocking network resources and enabling operators to leverage their networks much like smartphones are doing for the device world.

"According to Alcatel-Lucent's research, 70 percent of operators launch less than five applications per month. Operators with a developer program launch a superior number of new services, month in the middle of 2009, said Patricia Hargil, the head of Alcatel Lucent Strategic Programs. Successful programs address key developer pain points such as the need to support multiple devices, port apps across operators and transparency. Ultimately, we will need to reduce device and app store fragmentation."

Alcatel-Lucent's  first vertical API bundles include three social bundles supporting the creation of new mashups in the rapidly growing social gaming, advertising and virtual goods markets. Collectively, the APIs included are SMS, advertising, location, virtual goods, credit card and billing. The initial delivery of these API bundles targets the more than 14 million developers worldwide and the two fastest growing and increasingly profitable applications markets today: mobile advertising and virtual goods.

"Finally there is a way to make sure everyone is participating in the ecosystem and given a revenue-sharing opportunity," Merling said. "This allows developers to get on board quickly and operators to tap into new revenue streams they didn't have access to before."