Operators and app stores

The Internet is becoming more and more app centric as smartphone penetration and mobile computing are on the rise. This leads organisations to play with the idea of creating their own infrastructure in order to leverage on the opportunities and high demand for applications. There is a huge availability of app stores ranging from different mobile operating systems, netbook apps, HTML5 apps, TV apps, to stores specialising in selling apps for a distinct industry. There seems to be enough room for businesses to tap into this market. Most of the app stores are operated by the platform manufacturers; however, operators that are even closer to the consumer need to open their own versions of stores in order to create wider adaptation of mobile applications.

Alexander Rauser is CEO of Prototype Interactive

For operators this results in an increase in data usage by empowering the ecosystem, but also creating a new revenue stream through app sales. The challenge however, with these relatively new technologies is to target a broad range of consumers while being able to create enough content through app developers and content providers.

In order for the ecosystem to grow and become stable, a number of challenges have to be overcome especially from a regional perspective. Developers need to be able to develop for a wide range of devices; which means cross platform applications are an opportunity for operators while these are not owned or controlled by device manufacturers. In order to increase demand however, users need to be able to gain access to more affordable data packages and content from international app stores that are not always fully available in the region due to billing and licensing limitations.

Mobile devices are becoming more and more powerful in respect to their computing capabilities and this also requires the increase of available bandwidth for mobile devices and faster connection speed. This is especially true in regions where mobile penetration is at its peak as it is in some Middle Eastern countries, and mobile web browsing exceeds conventional web browsing at times due to unavailability of workstations in remote regions.

In general users are looking for more interactive experiences on their mobile phone and instant access to applications without the requirement to connect to a personal computer.

Currently this is mainly possible through the app stores of the phone manufacturers or platform developers. These have a great advantage over operators as they deal directly with the developers of the applications at different levels. The relationships and tight integration into their development tools gives operators little chance to be at the source of content generation.

However, while operators are trying to enter the app store market as they see an opportunity to generate additional revenue from app sales this partly makes sense as the operator has direct access to the end-user. Billing structures are already set in place as well as other operational systems such as customer support, which make the operator “technically” app store ready. However, revenue sharing models, application certification and other required procedures need to be taken into account and are very different in their operations than anything an operator would be used to.

If such infrastructure was established, combined with an easy-to-use system that allows users to download applications across different platforms and devices, successful application stores could be established. But to compete with the platform manufacturers’ app stores, operators should invest in technologies such as HTML5 and web centric applications that can run across different devices and that are not the main priority of the leading platform manufacturers. HTML5 applications could be game changers as they would allow operators to offer applications that theoretically can be developed by a much larger group of developers due to a lower entry barrier than native application development in lower level programming languages than HTML.

At the same time developers need to have enough reason to develop for the operator’s store and this is the biggest challenge. As other app stores already have wide developer bases and audiences, it will be difficult to recruit developers to focus on a new ecosystem while existing stores already bring revenue and results.

The question remains whether operators should enter the app store business or not. It appears that in order to come up to speed with existing systems, strategic partnerships seem to be wiser than trying to compete directly by implementing proprietary solutions.

Alexander Rauser is CEO of Prototype Interactive