Global Intelligence Alliance Group (GIA), a global leader in customized Market Intelligence services and solutions, has released an analysis of Mobile Application Marketplace initiatives, which indicates that Apple's App Store is ahead of Android by Open Handset Alliance (OHA) and Ovi by Nokia, based on its timeliness and number, variety and appeal of applications available.
The analysis was conducted along five parameters which GIA deem to be key success factors; time to market, the ability to attract developers, the rate of device adoption, an efficient interface and user experience, and having a critical mass of attractive applications.
"Competition among handset manufacturers and operators is intense, with different market players rushing to add features related to 3G and 3.5G connectivity. Features include multimedia tools, GPS location based services and initial tests for Near Field Communication. Market players have been taking different approaches to nurturing and consolidating their application ecosystems, some of which have been more successful than others," said Mr. Erwin Baumgartner, Head of GIA's Information Technology Practice in Asia-Pacific. "Applications can make all the difference, and manufacturers like Apple, who see the smart phone more as a software platform than as a set of hardware features have the ability to position themselves miles ahead of the competition."
Executive Summary
1. GIA first identified five key factors determining the success or failure of mobile application marketplaces: (1) time to market, (2) the ability to attract developers, (3) the rate of device adoption, (4) an efficient interface and user experience, and (5) having a critical mass of attractive applications.
2. Key contenders Apple, the Open Handset Alliance's Android, Nokia's Ovi, Microsoft's Skymarket, Blackberry and Palm were then assessed to determine which platform has the leading edge.
3. Apple's iPhone App Store emerges as the current leader based on its early presence as well as the number, variety and appeal of applications available. (See Rankings Table)
4. Android by Open Handset Alliance (OHA) is held back by the lack of devices available as of now while Ovi by Nokia needs to line up developers and applications before its launch.
5. Microsoft's Windows Mobile will have to take care of legacy fragmentation and release more concrete plans on when the release of its marketplace will happen.
6. Blackberry will have to focus on transforming the perception of its devices from a pure business focus to fully functional multimedia with cool applications.
7. Palm needs to keep the momentum, following the launch of Pre and accelerate the pace of getting the device and matching applications ready for consumers.
"Overall, Apple scores the highest, ahead of Android and Ovi. Newcomers such as RIM and Palm have yet to show that their storefront launches will drive success for their platforms. Veteran Microsoft has to reinvent and redesign their current setup of mobile application distribution in order to keep up with the pack. Industry players have to look closely at how and where an application marketplace fits within their own strategies. Some intend to generate revenue, some plan to strengthen the user community, and some even work to create a demand pull for the corresponding handset brands and models. Furthermore, mobile carriers need to be convinced that these marketplaces will work more efficiently at a platform level, not at individual operator level," added Baumgartner from GIA.
Full Analysis
iPhone Application Store (Apple)
Cashing in on its iPhone and iPod Touch's success, Apple was one of the first to capitalize on a mobile application single marketplace idea. Launched in July 2008, its marketplace has already surpassed 15,000 applications by early 2009. Its key categories are entertainment, utilities, education, productivity and games. Of these, games are the most popular genre. Developers get a 70% share of revenues, with Apple keeping the rest for its marketing and operating expenses. The store is a strong community-building tool for Apple, will contribute to iPhone adoption rates. Though procedures are straightforward, some developers note a very rigid and lengthy authorization process when submitting new applications for the platform. Apple's tight grip on the approval process and the software developer kit might deter some developers from tailoring their applications for Apple store.
Windows Mobile Skymarket (Microsoft)
Windows Mobile is by far the mobile OS with the greatest variety of applications. It is estimated that there are currently more than 20,000 different types of software that can be downloaded from a large number of 3rd party application stores.
One oversight by Microsoft was not consolidating the distribution channels for mobile applications at an earlier stage. Now, the landscape is very fragmented with multiple sites and providers offering applications for Windows Mobile based phones.
Skymarket is Microsoft's idea of a central repository for all its key mobile OS platform applications. The main challenge will be to channel and direct all existing applications, with capabilities for next generation WM, that are scattered across a myriad of marketplaces onto Skymarket. It is not clear when exactly Microsoft intends to launch Windows Mobile 7 and the accompanying Skymarket. The company however has recently released ‘My Phone', a cloud service for WM based mobile devices offering web integration of core applications and data.
Android Marketplace (Open Handset Alliance)
Android is the ‘new kid on the block' among operating systems for mobile handsets.
Initiated by Google, the Open Handset Alliance was able to attract a large number of handset manufacturers, and 2009 will be the year for Android-based mobile-device launches. Its open standards and non-profit orientation should get this platform up to speed and scaling fast. Launched in October 2008 with about 60 free applications, there were already 500 or so available titles by January 2009. The developer revenue split is similar to Apple's, with the developer receiving 70 percent. Google however vows not to cash in on the remaining 30 percent, but to reimburse carriers for their efforts.
However, there are some issues for Android to tackle. Some developers are holding back their releases as they wait for permission to set their own prices after the launch period - during which everything will be offered for free. With only a limited number of handset models available, the success and the addressable market will depend heavily on the future uptake of Android-based phones.
Blackberry Application StoreFront (RIM)
With more Blackberry devices entering the consumer space for entertainment and multimedia-oriented devices, such as the Curve, Bold or Storm, it is a natural step for Research In Motion (RIM) to attract the developer community with its own storefront and regain some control from third party stores like BerryStore.
RIM aims to open its storefront in March 2009 with special deals for developers. Promising to reimburse 80 percent of revenue generated to developers, RIM tops other initiatives from Apple or Android. A partnership with PayPal will further increase the chances of a successful commercial launch in a few months. The initiative also includes application portfolios that are tailored to the specific needs of mobile carriers and operators. One key task for RIM will be to further reach out to a more lifestyle oriented and hence application hungry crowd with its devices and application store.
Ovi Application Store (Nokia)
Nokia's evolution from its former cumbersome download store was well received when announced at the 2009 MWC (Mobile World Congress) in Barcelona. The Finnish handset manufacturer's solution will offer a similar revenue split for developers to Apple and Android (70:30), and surely attract the Symbian developer community given Nokia's large installed base of S40 and S60 phones. Full integration with the N97 will be launched in May 2009. The storefront aims to differentiate itself by offering smart, intuitive features such as suggested applications based on user profiles, location based integration.
The potential for Ovi is big, especially as the company plans to eventually extend this service to all Nokia devices, going beyond smart phones. The sheer momentum of Nokia's user base will be a big attraction to developers and should help off-set the disadvantage of launching later than some of its peer competitors.
webOS Software Store (Palm)
With the launch of its Pre smart phone and webOS operating system at CES earlier in 2009, the company is trying its best to regain a spot as top smart-phone manufacturer. Partnering with PocketGear, its current application store holds around 1,500 titles. How the application distribution strategy for webOS titles will be executed is yet to be seen. Palm's approach will however be less stringent and controlling as Apple's, sources say.
Key Success Factors
Time to market
First-mover advantages are critical and Apple got a good head start, while there was also a lot of positive press around Android's launch. Marketplaces need to be developed and populated to achieve critical mass, making time a crucial consideration. The need by other players to play catch up in order to ensure attractive software ecosystems is evident.
Laggards here are Microsoft and Palm with launch dates way into 2009 (or even 2010 for Microsoft), giving the competition a head-start in development.
The ability to attract developers
Be it clarity and transparency of software developer kits, approval processes, ease of programming language, reimbursement share and overall control/censorship, developers will have to make a decision on which platform to choose. Apple's coolness factor, and Android's openness will make these platforms magnets for developers. Further, Nokia should have no problem engaging the Symbian developer community to populate Ovi for its large user base.
RIM will have to ensure that developers will look beyond business/productivity tools encouraging focus on applications with a certain fun factor and leverage its higher reimbursement rate of 80%.
Device adoption / roll-out
The more devices (brands/models) that are available, the larger the addressable market for applications becomes, assuming no individual carrier, brand or model specific adaptations need to be done.
Windows Mobile and Nokia S40 and S60 based devices indicate an advantage on these established platforms over newcomers such as Android. While Palm will need 2009 to introduce devices, RIM and Apple can already build on a robust installed base of devices compatible with their respective storefronts.
Interface and user experience
Making the downloading and installation process fast, efficient and intuitive will be an accelerator for growth, and can increase the popularity of a certain application store.
Apple emerges strong here, while also dominant in integrating user popularity ratings and top downloads lists. Nokia's smart approach of tailoring the offering/suggesting applications based on user history, preferences, peers and location will put Ovi in a strong starting position. Palm has received good reviews on its new webOS interface and now needs to show actual proof once device shipments start.
Critical mass of attractive applications
Related to time-to-market, the number of applications, different categories, and emergence of fast spreading killer applications can determine the success or failure of a mobile application marketplace. Size-wise, Windows Mobile will have the lead here, although growth is currently strongest for Apple titles, which are also said to include many applications very well liked by its users. RIM and Palm need to get going fast once their storefronts are up and running.