Mobile World Congress this week has seen a flurry of announcements from device vendors and online players about new partnerships and enhancements to their application stores - Nokia, Microsoft and Samsung, to name a few. What has generated far less attention is news from mobile operators about plans for their own application stores or moves in that direction.
China Mobile aims to launch its own application store in two phases in 2009; Orange has plans to extend its existing application store to support more operating systems. The question is, can operators replicate the success of Apple, or are they wasting their time and money‾
Operators gamble on their own application stores: a risky bet
The short answer is that, for most operators, running their own application store to compete against Apple and co is a bad idea. The long answer is, of course, more complex, which is why the question is interesting in the first place. Deploying an application store is about creating a whole ecosystem to support, develop and provision applications both online and at the device level, including discovery.
A few operators - for example, Orange - are already better positioned to take this on having established developer forums. Ideally we are talking vertical integration. And to make the business fly you need scale and reach. Few operators can meet this tall wish list of requirements. China Mobile is one of the few exceptions to the rule because it controls the value chain in its home market. The application store push from Orange is consistent with its over-arching strategy to be an entertainment-oriented operator where content and applications are critical to the mix.
It has a well-established mobile developer community and online/mobile portal strategy, of which the application store is a natural extension. However, most operators are not well positioned to take this route and would do well to consider other options such as partnerships or outsourcing.
An understandable move for operators
We can sympathize with the reasons why operators might want to get into application store territory. It has proved very successful for Apple and, more importantly, is part of a wider shift towards the Internet as a platform for applications, mobile or otherwise.
The benefits, if done successfully, include increased data traffic, revenues from premium applications and possibly a share of the revenues from ad-funded free applications. Operators need to embrace this in some form, and an application ecosystem with front-end store is one way - though, as we have argued, is not an ideal route for most operators. But there is a more constructive way for a wider number of mobile operators to play in application store territory without launching a fully fledged application store to compete with the likes of Apple.
When you look more closely, a lot of operators' application store efforts are in fact an evolution of their old mobile portals, and this kind of refresh makes sense. In this context the application store tag is window dressing. T-Mobile's web2go looks a lot like a revamped version of T-Zones.
It contains an application store element but is part of a wider package based on decent search from Medio Systems and Yahoo, and a competitively priced data tariff.
There are also plenty of third-party platforms and white-label solutions available for operators that want to do their own thing as a complement to the big hitter application stores they might support. For example, Amdocs announced a solution this week joining vendors like GetJar and SurfKitchen, and 3 UK is working with GetJar.