Once this has been done, it can be fed with data obtained from ongoing business metrics. This provides visibility into how the system as a whole is operating along with how individual parts are performing.
Copy cats who fail to deploy such management infrastructure run the risk of failing simply because they had no way of knowing whether or not they were succeeding.
Although every operator's experience is different, there are some common principles relevant to any telecom pursuing this path. A sample:
- Intangibles matter more than ever. Cross-subsidization depends on perception, brand, and marketing.
- The developers' role is not to be a substantial source of revenue to the platform company, nor is this the role of applications sales.
- Attracting and retaining a development community is crucial, and significant marketing and support resources are essential.
- The platform company benefits by understanding and supporting its developers' business model as well as its own.
- Some telecom network platform services (such as location-based services) can be profitable and highly differentiating; others can result in significant wasted effort competing against entrenched players.
- Two-sided systems can produce a "runaway" effect, leading to exponential growth.
- Measurements to track during the early days of building an app store to determine its success include: the number of developers signing up, the number of applications being registered and the number of applications downloaded.
These principles are not just good ideas - copied from existing app stores because they seem to work - but are also supported by economic and case study analysis. We have found that one of the most informative approaches for a team of decision makers to understand two-sided models is to collaboratively draw a picture of the flow of value and information within them. For instance, a picture showing how developers influence end-users, and vice versa, helps to show how revenues that are generate from one side of the model can be used to cross-subsidize the other.
In an app store, understanding these principles can mean the difference between success and failure. With these tools in place, app stores are only the beginning, and telcos with this capability can explore other business models and related decisions that can create significant competitive differentiation.
Lorien Pratt and Mark Zangari are co-founders of Quantellia -www.effectivedecisionmaking.net