One factor that will remain important will be for the industry to arrive at a win-win role for the operator as the abundance of applications grows across the mobile internet ecosystem. 40% of mobile operators saw revenues fall in Q109, even as the uptake in mobile broadband usage grows 40-50% quarterly. With revenues per bit declining, operators are advancing rapidly toward a scenario where the more their mobile data networks are used, the more they lose. Despite any potential operator success gained from jumping into the appstore arena, operators are likely to maintain more relevance (and revenues) from focusing on marketing, user experience development, provisioning, billing, etc. I discuss this more at the Cisco SP Mobility blog at:
https://www.myciscocommunity.com/community/sp/mob...

Comments welcome

I assume that market share and revenue figures you brilliantly provided above are refering to consumer applications. Do you have any figures or pointers related to enterprise mobility app?

Thanks,

Jacky

I did have a slightly different view on your raising the bar of apps at $1.1 now to $1.5 in a year purely based on the premise ‘Apple has 75% of its download as free vs. 40% free application downloads for the industry’ – I guess the huge hit rates they get is due to the high mix of free v/s paid apps and am sure that some of the bigger h/w and s/w players in the industry will try to up the ante with higher skew towards free apps. This would help get higher traction and eventually higher prpensity to consume and pay!

That brings me to the other aspect that posibly needs to be considered i.e. ‘higher data revenue by operators’. While larger operators will have their stores, co-brand the store, have some play of their own, there will be some operators who just sit back and see the likes of Apple, Ovi, Android, BB Stores available for their consumers and just laugh their way to the bank with smart data plans to consume these apps

I do believe that there would be a few VAS providers who whould connect directly with the consumers and would use the mobile payment for direct billing. However, since the VAS provider space is fragmented, we are going to see very few successful direct to consumer models.

In terms of 3G, if you are talking specifically about India, I think the 3G spectrum would be used primarily for voice, data cards and to some extent video conferencing. I do not see any killer service or application that would fuel the 3G growth in India

Very nice analysis done for the Application market.

I would like to add few points:

1. As Rohit pointed to visibility of applications, what I see it is not the marketing alone which can make application successful. It is the “network effect” the application is able to create. Success of sites like facebook, orkut etc are due to fact that they have been able to successfully create the “network effect”. Going to these sites may not be my choice but it is guided by my peer groups preference for it.

2. Payments or money from the applications are again subjective. Emergence of third party payment gateways like credit card, debit card, m-pay etc is increasin. The plastic money is replacing the paper currency at a very high rate, it only provides the independence but also higher paying capacity. The other fact is subscriber might not be paying for using the application directly, but the one may make money thru the end service provider(content provider). Like an application where one is allowed to make reservations for travel on any airline without actually going to an agent, hence actually saving for the airlines in terms of commisions. The airlines can directly pay the application provider for every ticket booked thru them.

What I see is the applications which are more customer centric, able to provide benefit to a community with least direct impact on the wallet are going to rule the mobile internet.

Thankx
Ankur

1. Application Visibility – How will you make the application visible to the end user? I understand there will be a portal from device maker / carrier but with more than 1000+ applications, I don’t know how will the developers make the apps visible or as marketing people say, break through the application clutter. There may be a search engine, but the same problem still remains. Like at the time of Googling, most of the people are interested in first 10 search results etc. This may lead to the scenario where there will be few popular applications which will be highlighted on the front page of the portal and rest of them may get downloaded once or twice. In that case, I don’t know how the ecosystem will work out unless some kind of long tail strategy has beent hought of by the store owners.

2. Payments – How will the end user make te payment? If its throught he operator, than certainly operator will be the biggest beneficiary. Currently many m-payments applications are coming up, but that will need to scale up before the device makers & 3rd party store fronts will gain from applications

3. Developers network – I think there should be a strong developer network like Sun Developer Network for the applications to take off. In this case it will be easier for the device makers for they already have the developer network in place. Telecom operators forming a developer network won’t be an easy thing, for they don’t even have a single platform for installing the apps ( for e.g. I may be carrying a motorola phone and won’t be interested in symbian apps that may be on offer from operator).

4. Self Built Apps – I think this could be one of the hottest area where one can build the apps according to the need. For this there has to be a widget based platform (like yahoo Pipes) that can help a novice to build an app according to the need of the day.

Mobile Application Stores are part of a major sea change in economics. Phones are no longer a slave to the Service Providers. Applications are no longer prisoners in walled gardens.

The value is shifting to the mobile devices, mobile app developers, and to the SaaS providers.

Apple leads the way. And they lead in the right way, by helping others, the developers of apps and SaaS, grow and prosper.

The analysis of the iPhone’s app revenue is excellent. Let’s revisit this data in a year. I will predict a nice increase in revenue per iPhone/iPod Touch. Many apps are free right now, in what is an extended Beta, which also doubles as a viral marketing business tool. To see a complete picture, we need to count the SaaS revenues, that are enabled by Smart Phone front-ends.

The other part of this economic model is the sustained growth of Smart Phones. This amplifies the business model for Mobile App Stores, Mobile Apps, and Mobile SaaS.

It is a pleasure to read your articles. I have a few queries:

1. My understanding is that you have focused on consumer apps here and the economics associated with it. Do you see a role for VAS providers stepping in to develop more consumer apps since they have the domain knowledge to churn out innovative apps?

2. Since VAS providers are kind of “hiding behind the scenes” in the whole mobile ecosystem is it an opportunity for VAS providers to build their own brand and connect directly to the consumers?

3. What kind of impact shall we see on the “mobile app stores” with the introduction of 3G in India (especially b/w hungry apps like gaming, video streaming etc.)? If there is any data available to project the estimated revenue share, increase in market size etc. that will be helpful.

Thanks,
Sameer.

Do you have any idea how much download traffic was generated (as data transfer) for the operator since the billion downloads? In the same vein, do you know how much application generated data is being transferred through operator’s pipes? The transfer is still charged by the kB and some of the applications only use the operator’s infrastructure to get updates. Are you ready for video apps on mobiles?

You provided many figures to substantiate your analysis. Will it be possible to provide the links (outside Telecom Circle) to the origin of the data. If you had paid for it, just provide the link where the purchase is possible. I am building an MBA and some of this analysis can come handy to my assessments. You will be given full credit in the notes.

Thanks,
Constantin

Very good article. Do you have any insights on what kind of apps are being used in US/WE and what are the ones which are likely to be popular in India.

Arvind