Vodafone to open up network for 3rd party applications

In one of the most significant announcements, Vodafone today announced opening up of its billing platform for use by third party developers and thus making its applications store more attractive. This would help the developers get access to its global subscriber base of close to 300 million and more importantly potentially close to a billion subscriber in future through its partners (Verizon, Softbank and China Mobile who are Vodafone partners at Joint Innovation Lab). The developers would be able to charge directly using the Vodafone billing system and would get 70% revenue share. This announcement will pit the company directly against handset makers such as Apple, Nokia, Blackberry and Palm, as well as operating system developers Google and Microsoft Corp., all of which either already have launched an application store, or plan to.

This announcement becomes significant as it is the first of its kind from an operator. Vodafone said in a statement that the service will enable developers to use its direct billing capabilities to charge customers for applications and services through their existing Vodafone account, rather than having to give their credit card details. Operator billing is the most preferred micro-payment option and hence the applications on the operator platform have an advantage. This advantage was lacking in most of the application store announcements so far. In case of other application stores like Ovi Sore and Apple Store, the platform owners need to tie-up with the operators for operator billing and hence having to share revenues with one extra entity in the value chain.

Vodafone also added that it will also make available a set of network Application Programming Interfaces (APIs) which will enable developers to build capabilities such as direct billing and location awareness into their services. This announcement is also significant as operators have the cell site information which makes the location based applications work on the non GPS enabled handsets as well. This would save the developers a lot of money in getting the location information and would help keep the cost of application development low.

This attempt by Vodafone is likely to solve a lot of woes of developer community where the developers need to get their applications tested and approved on each of the individual networks of Vodafone (Mobile Application Development Challenges). Also, this would help Vodafone prevent itself from becoming a dumb pipe. More importantly, the debate on the emerging wireless business models seems to be getting settles in favor of “Platform Dominance Model” It seems that there are exciting times ahead with the mobile ecosystem moving towards an open ecosystem.

Research firm Strategy Analytics forecast earlier this year that the value of the mobile content market — including downloadable games, ringtones, wallpapers, video, mobile TV, text alerts and mobile Web browsing — would grow 18 percent to $67 billion this year. I am not sure that they took into account the multiple application stores that have now been announced in the last few months. Given the media blitz around the application stores, I would not be surprised if the mobile content market grows more that the predicted 18%.

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