Chinese operators have fallen for the app store craze like no others. China Mobile launched its Mobile Market store last month – one of the world's first operator storefronts – while rivals China Telecom and China Unicom are beta-testing their own platforms.
But they have a long way to go before they can convince the market of their commercial viability.
Chinese app developers and analysts have told telecomseurope.net that they regard all three app stores as rush jobs, unable to offer the same opportunities as the Apple App Store and unlikely to challenge it any time in the near future.
Li Xiang, an official from IT outsourcing company Chengdu ChangeTec, has found China Mobile's Mobile Market to be “barely useable”.
“The Mobile Market has many functional flaws and supports too few phone models," said Li. He believes it will take time for all three operators' app stores to mature. Chengdu ChangeTec has supplied a widget development tool to the China Telecom store.
China Mobile's Mobile Market opened with approximately 2,000 applications, about half of which are Symbian-based.
Zhu Lianxing, who leads a team of ten developing mobile apps, said his company was focusing almost exclusively on iPhone apps because it offered the only prospect of making money. Zhu's company is earning $1,000 per day from the sales of a single iPhone app, the Aquarium screen saver.
His company had submitted one app to China Mobile in May, but has not yet heard back from them, he said.
Zhang Yanan, an analyst from Analysys International, said in a research report that operators enjoyed the advantages of large numbers of subs, control of the distribution channel and convenient payment methods.
However, it was a challenge for them to provide a consistent user experience across different handsets and operating systems, he said.
China Telecom, new to the mobile business, is even weaker than China Mobile because it has a smaller subscriber base and fewer partners in the mobile content field, Zhang said.
“Apple's App Store was built based on the company's absolute control of the end-to-end platform. Apple has owned all users to itself because it provides both hardware and services. It is difficult for other companies to copy Apple's model in the short term,” Zhang said in a report.
However, he believes Apple's “walled garden” model would restrict its long-term development and advises Chinese app store operators to be open to collaboration.
Neither Apple nor China Unicom has revealed whether Apple's App Store software will be pre-installed on the Unicom version of iPhones, slated to begin selling in China in the fourth quarter. Unicom is understood to be developing its own app store for W-CDMA phones, which probably will not include iPhone apps.
James Fu, an independent telecom analyst, said that Apple not only needs a telecom value-added service license to operate its App Store in China, but also approvals from the State Administration of Radio, Film and Television and the Ministry of Culture to provide videos and games over its App Store.
However, another industry source said that Apple would be able to work around regulatory restrictions and serve Chinese customers from its base in the US as long as they pay by international credit cards.
“Telecom operators, whether willing or not, are simply pipes of data connectivity for Apple. Apple has enough bargaining power to avoid sharing revenues with the telecom operators,” he said.
Launched in July 2008 with about 500 applications, Apple's App Store has recorded 1.8 billion downloads and now offers more than 75,000 apps. The App Store brings in annual sales of around $2.4 billion for Apple, according to an AdMob report released in July.