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Motorola JV Preps App Store for Indian Carriers

Light Reading
LR Mobile News Analysis
Light Reading
8/27/2010

CanvasM, a joint venture between Tech Mahindra Ltd. and Motorola Inc. (NYSE: MOT), is all set to launch a white-label application store for both service providers and handset manufacturers.

The company has around 25,000 applications in the app store and is in talks with Indian service providers and handset vendors. CanvasM says it has already signed a deal with a service operator in the global market but declined to reveal any details.

“We are today sitting on a content repository of around 25,000 applications. We would be giving it to the clients on a revenue-share agreement. The revenue share with the developers can be anywhere between 50 and 70 percent,” says Jagdish Mitra, CanvasM's CEO.

Like most application stores, about 60 to 70 percent of the applications are going to be free. CanvasM has developed an integrated platform, and the company’s applications are both device and service provider friendly.

On average, VAS [value-added services] contributes around 9 or 10 percent to the revenue of an Indian operator, about 90 percent of which is coming from SMS. Declining ARPUs are forcing the operators to rethink their VAS strategies.

In an earlier interview with Light Reading Asia, Mandyam Madhusudan, the CEO of Virgin Mobile India, hammered home that point: "VAS will definitely increase in proportion for all the operators. We would be focusing on mobile commerce and social networking applications. We believe that social networking is going to be huge, especially for us, since we are a youth-focused mobile service." (See Virgin Mobile India's Second SIM Strategy.)

The VAS market is set to grow at 16.6 percent each year until 2015, according to a recent Frost & Sullivan report. Against this background, it is not surprising that the Indian operators are looking at application stores to turn around their ARPU figures. A number of Indian service providers, like Bharti Airtel Ltd. (Mumbai: BHARTIARTL), Reliance Communications Ltd. and Aircel Ltd. , have launched their own app stores. (See Bharti Launches Airtel App Central, Reliance Taps GetJar for Free Mobile Apps , Bharti Updates on App Store, Bharti Boasts App Store Success, and Aircel Plans Mobile App Store, Tower Sale.)

Most of the VAS companies in India are focused on the entertainment side, but CanvasM has decided to work on the utility as well as the financial inclusion side of the business. Mitra feels that utility VAS will play a key role in increasing the contribution of VAS to an operator's revenue.

“The service providers are likely to shift VAS focus from entertainment to applications that enrich life -- for example, commerce, health, and location-based services,” says Neeraj Jain, director of Transaction Services at KPMG International .

Currently, VAS in India is defined by entertainment and Bollywood content like ring tones, wallpaper, and more.

— Gagandeep Kaur, India Editor, Light Reading

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