Is India ready for customized app stores?

Jayanth Kolla/Convergence Catalyst
21 May 2012
Branded mobile app stores by both device OEMs and carriers have existed in India for a while now, and continue to be launched.
Nokia launched its ‘Ovi store’ (later rebranded as ‘Nokia Store) in 2009, incumbent operator Bharti Airtel has its ‘App Central’, Aircel launched ‘PocketApps’ in 2010, and recently Idea launched ‘App Mall’ and Vodafone its ‘VStore’.
But these stores have failed to garner significant adoption primarily due to device fragmentation (India being predominantly a featurephone market), inconsistent experience and ineffective communication/marketing campaigns.
Smartphones nullify the issue of fragmentation and provide a stable and consistent experience (in the form of standardized operating system, faster processors, large memory, etc) for app downloads and usage. The proliferation of smartphones has only recently begun in India. While smartphones formed about 7% of total mobile device sales in 2011, they are expected to grow to about 15% in 2012 and continue growing in the coming years.
This smartphone growth in India in the recent years has been be primarily driven by wider acceptance by Indian consumers and the devices coming down the price curve. In 2012, share of Android OS is expected to continue its recent growth momentum and be the dominant platform, based on multiple devices being launched by both domestic and global OEMs, across all price points.
But competition among various Android-based device OEMs is also increasing. Currently, about 125 Android-based smartphones by over 17 OEMs are available in India or have been announced. Most of these devices are developed using the default Android user interface and comprise the Google Play app store (formerly ‘Android Market’), which leads to lack of differentiation among devices of various brands. This commoditization and lack of differentiation among various device models is a cause of concern, especially for OEMs. Increased competition is leading to a shrinking upgrade cycle and increased churn - the average smartphone upgrade cycle in India fell by 30% between 2009 and 2011, and is expected to decline further.
One way of overcoming the issue of commoditization and lack of differentiation, and potentially increasing consumer engagement and brand loyalty is launching customized, branded app stores. Apps are an integral pat of the smartphone ecosystem. Many services such as multimedia (music & video) consumption, gaming, reading, location-based services, web browsing, email access, social networking, etc., which were accessed using multiple devices and platforms are being increasingly done using a smartphone. And, apps are playing a key role in enabling this convergence.


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