Updated: Verizon denies plans to work with carriers, OEMs on an app store to challenge Google
Verizon Wireless (NYSE: VZ) denied a report that it wants to build a new coalition of wireless carriers and device makers to create an application storefront that would be an alternative to Google's (NASDAQ: GOOG) Play Store.
"We have no plans to do that," Verizon spokeswoman Debi Lewis told Re/code. "Been there. Done that."
Earlier, The Information reported that, according to unnamed sources, Verizon had talked with other carriers and OEMs about the store. According to the report from The Information, the new store could let app developers take advantage of network-specific functionality, advertise their wares in the store and give consumers more proactive tips about which apps to use, the report said.
The storefront would be for Android devices, the world's most popular smartphone operating system. According to research firm IDC, Android made up 84.7 percent of all smartphone sales in the second quarter. Google has assumed a dominant role in mobile and takes a chunk of revenues generated from its Play Store.
Verizon aims to change that model, though the report said Verizon's talks with other carriers and hardware manufacturers are still at an early stage. A Verizon spokesman declined to comment, the report said.
After Verizon's Lewis issued her denial of The Information's story, the article's author wrote on Twitter that "@Verizon, instead of not saying anything or saying the truth, is choosing to mislead reporters with its comment." He said that The Information had given Verizon three weeks to respond to the article and Verizon did not.
According to The Information's report, Verizon wants to fight against the dominance of Google and Apple (NASDAQ: AAPL) in app distribution--Apple and Google combined for 96.4 percent of the smartphone operating system market in the most recent quarter. Verizon also wants to "balance the ecosystem" to give developers and consumers more choices. Right now, app stores can make it hard for developers to get their apps discovered, though Apple and Google have been working to improve discoverability.
To set the new app store apart, Verizon would create a service that would proactively recommend apps to people based on factors like their location, the time of day and what their friends are doing on their phones, the report said. Carriers can also provide incentives for developers, such as zero-rating the data cost associated with using their apps or using deep packet inspection to deliver content more efficiently.
"There are unique capabilities of the networks that aren't being utilized," one person who has been involved in the effort told The Information.
Over the past year or so, the report said, Google has cut the percentage of Google Play revenue it gives to carriers and hardware makers from 25 percent to 15 percent in most cases. (Google used to keep 5 percent but now it keeps 15 percent, the report said.) Apple took in around $4 billion over the past year based on its 30 percent cut of App Store revenues, while Google generated around $2 billion before splitting revenue with carriers and device makers, the report noted. However, there are fears Google might find ways to keep more revenue as Android continues to grow.
Verizon's reportedly re-entry into the app store game is noteworthy considering recent history is littered with failures of such efforts.
Indeed, in March 2013 Verizon shuttered its own banded app store. Shortly before that, the Wholesale Applications Community wound down its own effort to streamline mobile software development and cross-operator distribution by creating a common set of wireless operator application programming interfaces.
Another alternative app store is PlayPhone, which has managed to form partnerships with a number of the major U.S. carriers. PlayPhone is a social gaming service with more than 350 titles from Big Blue Bubble, 11Bits and several other independent developers. The company has signed up Verizon and Sprint (NYSE: S) to offer its store pre-loaded on select Android smartphones. PlayPhone has also partnered with AT&T Mobility (NYSE: T) on an HTML5 store.
- see this The Information article (sub. req.)
- see this Re/code article
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Article updated Aug. 20 at 4:20 p.m. ET with a statement from Verizon.