App stores have introduced new distribution model

The advent of the applications store has brought a new model of mobile content distribution. The app store provides the opportunity to capitalize on direct relationships with consumers, linking them to the brand and offering an easy way of buying stuff they want. A kind of digital equivalent of a farmer's market, cutting out the middle man.

The success of the iPhone Applications Store and the launch of the Android Market for the first Android-based device, G1, gave rise to the phenomenon of applications stores in 2008.

However, the idea of the app store is not a new one: Qualcomm may have been the first to put the idea into action, opening its Binary Runtime Environment for Wireless (BREW) to software developers and allowing users of BREW devices to download applications directly to their phones.

This was not a farmers' market in the full sense as Qualcomm was the intermediary between an elite group of users (BREW devices consumers) and software developers striving to fulfil the requirements to be part of the BREW catalogue.

The iPhone app store was a huge success with 200 million downloads in only the first 100 days of operations. Behind this success there is certainly a very well known brand, but mobile users are becoming increasingly aware of how they can personalize their mobile devices and experiences.

Recognising this, other have copied Apple's example including Samsung Mobile Store, Nokia Ovi Store, O2 Litmus and the Blackberry Application Storefront.

Mobile network operators and mobile device manufacturers that have direct relationships with users will be able to capitalise these relationships, linking customers to the brand and a simple way of buying apps. 

Mobile social networking companies can also play the card of the app store because they have communities of users.

Opportunities for content providers lie in developing applications and being able to sell them on different stores for different platforms and devices.

There are also opportunities for service and technology providers in the areas of billing, distribution and retailing, storefronts, advertising, and marketing; all elements necessary for a successful store.

Competition between stores will mainly lie with the quality of the catalogue, on the level of interactivity with the users and on affordable pricing models.  In the latter issue, the role of advertising can be crucial. The adventure has just started.

Saverio Romeo, analyst, Frost & Sullivan