Ops Still Finding Their Way With Apps

HONG KONG -- Mobile Asia Congress 2010 -- When it comes to mobile applications, operators are all agreed on one thing -- they need to figure out a way to make money from the apps that smartphone users are downloading in the millions.

Other than that, there is a great deal of fragmentation in terms of approaches, timescales, and aspirations, with operators still exploring the various ways to engage with the global applications development community, deliver the capabilities their users want, and exploit the capabilities that are unique to telecom operators.

And operators need to exploit their unique capabilities if they are to avoid the threat of becoming dumb pipes, said Ryuji Yamada, president and CEO of NTT DoCoMo Inc. (NYSE: DCM). They need to use their billing and authentication capabilities and combine those with smartphone functionality and the benefits that network technologies such as LTE can deliver to create new value-added services.

That, though, requires a lot of internal development, a degree of control over the functionality of the smartphones connected to the network, and a next-generation infrastructure.

In the meantime, some operators clearly believe that building their own app store to rival the success of Apple Inc. (Nasdaq: AAPL)'s venture (and other third-party stores) is the way forward, with two of China's big three carriers having gone down that route. (See China Unicom Builds 3G App Store, Nielsen: Mobile Users Prefer Third-Party Apps, and China Mobile's App Adventure.)

China Mobile Ltd. (NYSE: CHL) provided an update on its Mobile Market here, noting that it now has 450,000 registered users, has recorded more than 25 million downloads, has more than 20,000 applications available, and is engaging with more than 50,000 applications developers. However, the carrier, which has more than 400 million mobile data users, isn't saying what sort of revenues it's generating from its store. Wang Hongu, deputy general manager of data services, described the initiative as a "strategic pivot" during an App Planet conference session here Tuesday.

China Unicom Ltd. (NYSE: CHU), meanwhile, recently launched its WoStore in the Shanghai market, and today announced the app store, which was built for the operator by ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) to support "all open smartphone platforms except iPhone," can now also be accessed in Hong Kong.

The GSM Association (GSMA) is trying to do its bit to bring harmony to the market by supporting the Wholesale Applications Community (WAC) initiative, which is aiming to deliver a unified set of interfaces for the development and distribution of mobile and Internet applications. The idea is to enable developers to create a single application to the WAC's specifications which can then be offered to end users by multiple operators, avoiding the problem of an application having to be rewritten for each operator app store. (See MWC 2010: Operators Form WAC Pack for Apps Push.)

Here in Hong Kong it was announced that WAC operators will use the GSMA's OneAPI as the standard specification for the exposure of network APIs (application programming interfaces).

WAC is gaining industry support (including from China Mobile), but getting little more than a lukewarm (at best) reception from the applications development community. (See WAC Adds Members , WAC Beefs Up Its App Pack , Operators Have a WAC at Apps , Operators Need Developers for Apps Ambitions , and Mobile Operators Strike Back on Apps .)

And while WAC is being supported by mobile operators, it certainly isn't regarded as the only route to the application community for carriers: Both Telenor Group (Nasdaq: TELN) (which has multiple operations in Asia/Pacific) and Hong Kong CSL Ltd. said here on Tuesday that any WAC developments would need to run alongside existing third-party apps platforms.

The big question around building profitable revenues from mobile application strategies remains unanswered, though. None of the operators here at Mobile Asia Congress are revealing their investment (or return-on-investment) models around their apps strategies. One carrier, though, provided a bit more insight. Indonesia's XL Axiata (formerly PT Excelcomindo Pratama ) claimed it is generating greater revenues from its mobile data services strategy than its counterparts by focusing not on smartphone users (of which there are relatively few in Indonesia), but by building an app store focused on delivering more personalized app packages for individual users of regular feature phones, using a platform from Motricity Inc.

But as smartphones become more pervasive, NTT Docomo's view that operators need to build on their unique strengths might be the most relevant in terms of user interest and revenue generation, especially as ABI Research has just forecast that "revenues generated from sales of mobile applications are expected to decline, due to high competition driving down average selling price of applications."

— Ray Le Maistre, International Managing Editor, Light Reading

sarahthomas1011 12/5/2012 | 4:18:16 PM
re: Ops Still Finding Their Way With Apps

Axiata's approach sounds a lot like Sprint's new ID packs. Seems like a good approach to me. Having a carrier app store alongside the OS's store and potentially others will only be confusing for consumers.

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