Filling the app gap

John C. Tanner
17 Feb 2011

Whatever else you can say about 2010, it was a huge year for mobile apps, and not just for Apple. According to app store analytics firm Distimo, prices are going down but the volume of new apps is growing phenomenally. Apple doubled its app count in 2010, while Android Market's volumes grew sixfold, and BlackBerry App World and Nokia's Ovi Store each showed triple digit growth (see sidebar, "Apps away!").

But while that's good news for Apple, Google, RIM and Nokia, as well as apps developers, the question, as usual, is what it all means for cellcos apart from extra data traffic.

Cellcos have been struggling with this question since Apple launched the App Store in 2008, and the question has grown more pertinent as other mobile OS storefronts have taken off since then - where do operators fit in an OTT apps-driven market that doesn't require their direct participation?

That question was at the forefront of last November's Mobile Asia Congress, and the question itself is complicated further by the likelihood that it's not only a matter of smartphones growing more popular - which they are, according to analyst projections that expect them to outnumber feature phones in the next five years - but also the ways they influence the evolution of user behavior.

"The growth of wireless connectivity, social networking and broader access to the Internet via mobile will change the way people interact and be entertained, and will create new commerce opportunities," HTC chief Peter Chou remarked onstage during the opening MAC keynotes.

"The smartphone of the future will be your most intimate companion, your main device for communication and information - it will be your content portal, your physician, your wallet," said Chou. "The computing paradigm is shifting from the PC-based desktop to a new era of mobile Internet that is more self-defined and socially driven."

That paradigm shift has spurred industry leaders to call for a more "open-minded" approach to mobile services.

"Applications are changing the mobile ecology. We need to be open-minded to explore new fields, new business models, and cooperation with new partners," said China Mobile president Li Yue.

Of course, how a given cellco distills that into an actual strategy will inevitably vary. China Mobile, for example, is banking on a combination of media apps and "daily life" apps that focus on transforming the smartphone into a daily productivity tool (i.e. a smartcard that pays your bus fare and opens your front-door lock).

But a key theme that has emerged is the importance of focusing on the cellco's key strengths - namely their billing relationships with the customers and their network assets - to add value where OTT competitors can't.

That's starting to happen now, but it's not just stopping there. Cellcos have also been busy developing a horizontal apps ecosystem that will see fruition early this year, and could not only make cellcos a relevant force in the overall apps game, but also do so in a way that keeps their existing business models more or less intact.


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