Application stores have become the latest industry bandwagon

By Guillermo Escofet

The Mobile World Congress has served as the starting line for many of the mobile industry’s bandwagons down the years, and this year’s show – held a week ago in Barcelona – was no exception. One of the largest bandwagons this time around was that of application stores.

It seems that everyone wants to sport an application store – handset makers, OS providers, operators – in what is essentially another knee-jerk reaction to Apple’s groundbreaking iPhone. At last year’s Mobile World Congress in Barcelona, the big theme was a slew of devices that tried to emulate the look and feel of the iPhone. This year, only seven months after the launch of the App Store on the iPhone, application stores were de rigeur.

Nokia, Microsoft, O2, RIM and Samsung all unveiled – or put flesh on previously bare-bones announcements of – app stores they are intending to roll out in the coming year. In the few months preceding the show, there were also launches or announcements from Google, Orange and Vodafone. Other operators are hatching similar plans.

By end-2009, users with phones running the latest version of the Windows Mobile operating system will be able to access applications on Windows Marketplace; those owning the G1 and other Android devices will be able to do the same on Android Market; those owning BlackBerry devices will have access to the BlackBerry Application Storefront; those owning Nokia Series 40 and 60 devices will have access to the Ovi Store; those owning Samsung S60 and Windows Mobile devices will have access to Samsung Mobile Applications; those subscribed to the O2 UK mobile network will have access to O2 Litmus; those subscribed to Vodafone will have access to Vodafone Widget Manager; those subscribed to Orange will have access to Application Shop; and so on.

The idea behind these application stores is to give developers a forum in which to publish their apps and sell them directly to end-users. They follow a self-publishing model freer than traditional operator content portals, where only a select few products gain placement after a long vetting and certification process and where pricing, contact with end-users and all other aspects of retailing and marketing remain firmly in the operators’ hands.

So is the new wave of app stores a bright new dawn for developers, or does it cast an even longer shadow of fragmentation in a sector crying out for greater simplicity in the way products are taken to market?

The ideal scenario for developers would be to publish their apps in just one place that gives them access to all mobile users. Clearly, that’s not what will be happening.

And not only do these new stores segment the market into different user groups, but most are also geared at smartphones, rather than mass-market devices, further limiting their addressable market.

But these new stores are at least providing thousands of developers that would not normally get a taste of the mobile content value chain a chance to reach certain user groups with their wares and have a crack at making money from them. Developers have been trying for years to make money by creating Java apps that can be downloaded on mass-market devices beyond official operator retail channels. But many have gone out of business in the process or simply defected to other environments, such as the fixed-Web and virtual-console worlds, after failing to make much money.

Judging by the 500 million-plus downloads clocked up by the iPhone App Store, it would seem that designing so-called native apps, through the retail model pioneered by Apple, is a surer way for developers to make money. But it is easier for developers to design apps for just the iPhone than it is to design for all handsets powered by a particular operating system or in an operator’s portfolio.

What does all this mean for end-users? Where should they go to download apps?

That will largely depend on what device they end up with and, to a certain extent, which operator they are subscribed to.

Although some applications might make their way to all of the stores being rolled out, it is likely that most will be isolated to just one or a few of them. So the applications users have access to will depend to a large extent on which store they have access to.

As Ralph de la Vega, CEO of US operator AT&T Mobility, warned at MWC, the current app-store craze will just lead to “islands of innovation,” rather than provide a single channel for developers to reach users. And whether users hit upon these islands will very much depend on chance.