App Store wars, predictions by CellStrat and suggested strategy

There is an excellent article in Business Week (April 6, 2009 print edition) this week on Mobile App Store wars by Reena Jana and Peter Burrows. Below is a summary with some additional comments by us. At the end we make some mobile app market share predictions for 2011 and suggest some strategic ideas :

Business Week article (“An All-Out Online Assault on the iPhone”) :

RIM, Nokia, Microsoft and Palm are planning an assault on the Apple’s Red-hot App Store by launching their own App Stores for mobile phones. Mike Lazardis, co-CEO of RIM is set to launch BlackBerry App World at this week’s CTIA in Vegas. App World will have minimum pricing of $2.99 per app and will provide 80% of the dev revenue to the developer vs Apple’s 70% rev sharing. This is bound to entice more serious App Store developers who like the higher cut in case of BlackBerry. Moreover the latter is more prominent in the corporate circles so is likely to get corporate-minded developers. Mike McGuire of Gartner estimates that there will be significant threat to the Apple App Store with these plethora of App Store offerings. No wonder then that Apple has released an enhance iPhone 3.0 with tons of new functionality for iPhone developers. Rumors abound of a new iPhone device come June – Apple WWDC conf is around that time so a likely point for new hardware announcement.

Apple has created a new business model which these other Apple wannabe mobile firms want to copy now. While the simple mobile phone continues to take a hit from recession, the smartphone market is expected to jump from 139 million last year to 295 million in 2010, per Gartner. This will exceed the 300 million-unit PC market in due course. If not for netbooks, PC market is set to be outpaced by mobile phones in few years.

RIM is not a newbie to mobile app market. It has seen download of its application kit 100,000 times and there are BlackBerry apps for QuickBooks and clinical apps. However BlackBerry does not have a consolidated site strategy where the applications are hosted and distributed leading to Apple being a first in the most intuitive delivery strategy.

Well, Apple is way ahead for now. It remains to be seen if others can catch up in Mobile apps or Mobile Web world. Nokia, RIM and others sell far more phones than Apple but iPhone growth continues to defy gravity giving a shiver to the other entrenched mobile players. Who imagined that a formidable and innovative firm like Nokia would have to worry about a new-to-town cellphone maker ?

Apple App Store has 25,000 apps which span the spectrum of uses. Santoshi Nakajima, president of photo editing startup Big Canvas claims that they don’t even bother with non-iPhone App stores. iPhone is that strong in hearts and minds of developers. Many developers say that Apple’s real edge is in providing the tools to help them build cool, innovative programs. Mark Woolen, an Oracle VP claims that they make apps for both BlackBerry and iPhone but iPhone offers a more elegant approach to app development over mobile phones.

The good thing is that this competition is great. It is bound to fuel innovation among mobile phone developers. Microsoft strategy is to offer Windows mobile phones which work seamlessly with its Windows OS (yawn!@), Nokia Ovi Store, scheduled to open in May, is adopting a creative approach – it will offer content based on user’s tastes, location and friend’s recommendations. Nokia is trying to offer personalization in app search and delivery. Interesting.

It is all good. We look forward to these app store wars. May the best win and may innovation thrive…

Now some predictions from CellStrat for next 1-2 years :

– iPhone will maintain the market leadership in mobile web and mobile app store. Others will struggle to come close to iPhone App Store penetration.

– RIM BlackBerry will provide significant competition in corporate world to iPhone. We feel BlackBerry is behind in consumer segment in spite of being a top smartphone maker. They need to bring out some more compelling consumer devices.

– Nokia and RIM will be the strongest after Apple iPhone and pose the maximum threat to iPhone App store. Nokia may come out a good second ahead of BlackBerry due to its massive global footprint. We believe Nokia will have 10-20% of overall app market and BlackBerry might in the 10% range on strength of its corporate connections.

– Microsoft, Palm and all others will be third in Mobile App Store strategy. We still have to see what effect Palm Pre has on marketplace but its app store may continue to lag regardless of Pre adoption (due to developer apathy). All these other mobile App Stores combined might be limited to less than 20% of overall Mobile App Store market share.

 

Strategy for success for Mobile App Stores :

– Developers, Developers, Developers – Focus on developers and making their lives simple by providing tool systems easy to use and deliver. Develop vibrant developer community around the App Store and its tools.

– Focus on devices – Get in the bed with the best devices – your own or third party.

– Focus on usability – how to make the user experience with the apps simple and intuitive. Hire some usability experts (Sorry, Steve Jobs is not available).

 

We believe with these ideas, non-iPhone App Stores can cause some dent in iPhone App market.

CTIA Wireless start next week in Vegas, Skype on iPhone and more

CTIA Wireless starts next week in Las Vegas and we will be tracking the happenings there. Should be interesting. Also more on Mobile App Store war soon. Plus Skype is releasing a client for iPhone (finally!!) – Skype CEO may announce this at CTIA, we hear. Earlier there were other VOIP clients for iPhone which were providing the Skype interface. Finally Skype decided to go direct on iPhone. We are excited. We intend to check this service out. Tell you more about it later. But we suspect that Skype on iPhone works only on a WiFi network similar to TruPhone. That will be an ongoing problem as cannot use VOIP client while on the go (in TruPhone, one has to incur a domestic calling charge with their AnyWhere service to use TruPhone on a regular wireless network – need to check if Skype on iPhone will offer service over operator wireless network).

TV Episodes on BlackBerry soon

RIM is planning to announce a full-episode television service for BlackBerry users as early as next week at CTIA. The service is part of RIM’s effort to turn itself into an attractive multimedia option. It will be on a monthly subscription based model. Multiple broadcast and cable networks have licensed content for the service. Read More here.