CommunicAsia 2010: Storing Up App Trouble?

SINGAPORE -- CommunicAsia 2010 -- India's mobile operators are unlikely to succeed with their app store ambitions unless they develop a broader app ecosystem, according to Analysys Mason partner Amrish Kacker.

In an effort to replicate Apple Inc. (Nasdaq: AAPL)'s successful iPhone app store model, a number of Indian operators, such as Bharti Airtel Ltd. (Mumbai: BHARTIARTL) and Aircel Ltd. have launched app stores in recent months, while Tata Teleservices Ltd. and Reliance Communications Ltd. will soon join the fray. (See Reliance Taps GetJar for Free Mobile Apps , Aircel Plans Mobile App Store, Tower Sale, and Bharti Updates on App Store.)

However, there are doubts about whether these app stores are likely to generate substantial revenue streams for the operators.

"The Indian operators have to realize that they need to develop the right ecosystem to make an application store work," Kacker tells Light Reading Asia. "Just launching an application store is not likely to work," he adds.

That's not the only hurdle facing the operators, as, according to one of the most experienced and respected carrier CEOs in Southeast Asia, mobile operators need to come to terms with the very low success rate of most apps on offer.

"Most apps are like butterflies -- they're beautiful to look at, but they don't live very long," stated Neil Montefiore, CEO of Singaporean carrier StarHub , during a CEO roundtable session. (See StarHub Picks SeaChange for Mobile TV, StarHub Leads in Singapore Dual Carrier Race, and StarHub Sets Packet Precedent.)

Very few apps have a long shelf life and generate significant revenues and profits, added Montefiore.

So what should India's mobile operators be considering?

To create the right ecosystem for app store success, Kacker suggests that operators in developing markets, such as India, should increase the scope of apps to cater to the broader segments of society.

"The operators shouldn't constrain themselves by defining applications as something that's downloadable. It should be any service that is making the user share some money with the operator," noted Kacker during a conference presentation today. "This will dramatically increase the addressable market. The traditional definition has a limitation, in that a very small percentage of devices in the emerging markets can actually download applications."

In Kacker's world, then, most value-added services would be included in a mobile operator's app store.

But a change of definition alone is unlikely to have any major impact on the operator's bottom line. What is important, though, is for the operators to create the right ecosystem not just for the development of the most appropriate apps, but for the delivery of them too.

The operators need to consider new delivery channels in the emerging markets like IVR (interactive voice response) and SMS.

In addition, the operators need to look at pre-paid business models for their app stores, as that approach is more likely to succeed in emerging markets, says the Analysys Mason man.

— Gagandeep Kaur, India Editor, Light Reading

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