Cashing in on the app store craze

Robert Clark
23 Apr 2010

Just how many app stores do we need? According to GetJar, there's 38 of them out there.

The vast majority will not be just flops, they'll be megaflops. It's the nature of internet business that all of the spoils go to the winner, and precious little else goes to the rest. Think search (Google), social networks (Facebook), and online auctions (eBay), books (Amazon) and so on.

That said, the app store is different because it's essentially a function of the handset platform. If you have a kickass OS, you have a business. Which means maybe five companies - Apple, Google, RIM, Nokia, Microsoft.

Apple's extraordinary run of success is a result of its ability to integrate its three innovations - the device, music store and the app store - into a single seamless, profitable whole.

A recent study by Dutch firm Distimo found that Apple store had clocked up 151,000 apps, and was adding 13,900 a month. Android is the fastest-growing (percentage growth), with 19,900 apps and adding 3,000 each month. Nokia (6,100), BlackBerry (4,760) and Palm (1,450) and Microsoft (1,250) make up the rest.

The app store is challenging to operators because, apart from highlighting their poor mobile web offerings, it disrupts their near-monopoly over the customer billing relationship.

Many of the tier 1 operators have announced app stores, although only Vodafone's and China Mobile's have actually launched.

China Mobile's was such a disaster that the company had to relaunch several months later.

It's hard to see any of the top four app stores being eclipsed by an operator store, but there are spaces in the market for cellcos.

Their biggest problem is that while telcos have always collaborated well to set standards or accounting rates or interconnection rules, they only seem to work with similarly hierarchical corporate organizations. Not so with the small, lithe app developers - the two groups are on different planets.

Theoretically, the operators would seem to be ideal customers for a white-label app store approach but that ain't going to happen, despite the eager efforts of vendors like Samsung.

Anyone who could build a decent app store by now would have already done so. However, it's not just the operators who've missed the app store bandwagon. The big handset guys have been equally woeful. Samsung and LG may have displaced Motorola and Sony Ericsson on the handset sales charts but, lacking a decent smartphone OS, they've struggled with the online store. Their strength is building sexy hardware, not software with open APIs.


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