One of the significant news from MWC 2009 (mobile world congress) was the culmination of rumors with official announcements of app stores. Now we have a long list of Application Stores including:
- Apple is the innovator and king of this and called it Apple App Store
- Google called its app store as Android App Market
- Nokia extended its service brand Ovi to Ovi application store
- Microsoft may call its service SkyMarket and its own service as My Mobile for Windows Mobile phones
- RIMM called it Blackberry Application Store Front
- Samsung for its smartphones created Samsung App Store
Why is this significant for the Mobile VAS (mobile value added services) market?
Until now, Mobile markets have suffered from 3Ds:
- Distribution
- Discovery
- Dollars or whatever Currency you prefer
Theses announcements solve two of the problems - that of Distribution and Dollars.
With smartphone sales estimated at over 60M units in 2008, it is clear that software developers only working on smartphone now have access to a large market. Should VAS developers even bother with lower-end phones? We will tackle this in a later blog.
How did we reach the 60M units number – based on many articles and estimates with the best one from Eric Zeman at Information Week. Here is the breakdown which may cause many arguments and surprise many:
- Apple shipped 14M in 2008
- Microsoft shipped 20M in 2008 – yes more than Apple
- Nokia shipped 18M in 2008 with N and E-Series counted as smartphone
- RIMM shipped close to 14M in 2008 of Blackberry Curve and up
With an average price of $20 per application/application pack for the life of smartphone, there is room for many $100M software companies in the mobile VAS space with focus only on smartphone. No need to have large expensive sales forces calling on many mobile operators worldwide as distribution is now possible from the app stores which in most cases give 70% of the revenue to software developers rather than 20-50% which operators are giving to the software developers. So what does this mean for Mobile Operators – relegation to being a dumb pipe or? Of course, it is different for different geographies – we will tackle that in a later blog.
Now comes the third problem something that has plagued most application stores including that of facebook, myspace and hi5. Yes that is the problem of discovery and this is where virality, usefulness and marketing becomes ever more important. We will tackle this in the next blog.
R. Paul Singh
