Mobile companies chasing Apple's App Store

Apple's popular App Store has proven that selling mobile applications for smartphones is a hot business, but can all these copycat application stores expect to find the same success as the App Store?

Companies, such as Nokia, Google, LG Electronics, Research In Motion and Microsoft are hoping they can. Since the Apple App Store came on the scene a year ago, these companies have each announced plans for their own application stores.

LG Electronics, the third largest mobile handset maker in the world, is the latest to announce its store. On Tuesday, the South Korean device maker announced it has launched its own application storefront for its phones. The market place, which is initially only available in Asia, has 1,400 applications. The company said it plans to boost that number to 2,000 when it allows access in Europe and South America later this year.

LG hasn't yet set a date for opening its store in the U.S. But there are plenty of other companies launching application stores here. Research In Motion launched its BlackBerry App World store in March. The store only has about 2,000 applications. The company is currently developing a social networking site to help boost adoption of its applications.

Other device makers, such as Palm, are reaching out to the developer community to create applications for its devices. But so far the new Palm Pre, which uses a sophisticated operating system developed specifically for the device called WebOS, only has a handful of applications. Still, consumers have been downloading them in droves.

Google's Android Market has also launched. Google professes it has a long term advantage over the iPhone because it's developer community is more open. And while the store is still young and relatively small today, it will likely have a large following among developers.

Earlier this year, Microsoft announced its Windows Marketplace for Mobile. And on Tuesday, the company said that the company would be accepting submissions for its application store starting July 27. The company also said that it will support Windows Mobile 6.0 and 6.1 by the end of 2009. The Windows Marketplace for Mobile is expected to launch in the fall.

Even Verizon Wireless is talking about developing an app store for its smartphones. Currently, Verizon offers applications using its VCast service and the BREW platform for its feature-phones. But now the wireless operator is talking about launching an application store just for smartphones. A Verizon Wireless executive recently told the blog GigaOm in an interview that the company is developing a marketplace that will aggregate applications from all the other storefronts from four different developer communities: Windows Mobile, Palm, Android, and BlackBerry.

And there are still other application stores in the works. Nokia has launched its own application store using its Ovi platform. And the Symbian Foundation is also working on a developer program to get more applications on the market for consumers with smartphones running the Symbian operating system.

All of these companies are hoping to tap into the success that has been demonstrated by Apple's App Store. A year after it launched, Apple claims the App Store now has over 65,000 applications and that users have downloaded more than 1.5 billion apps. The software developer community has also exploded with over 100,000 developers creating applications for the iPhone.

With statistics like this, it's easy to see why Steve Jobs, chairman and CEO of Apple, is not worried about competition from others developing their own application stores.

"With 1.5 billion apps downloaded, it is going to be very hard for others to catch up," he said in a statement.

Indeed it will be hard to catch Apple now. But it's easy to see why all these players want a piece of the action. Apple has proven that applications are a powerful differentiator for devices. In fact, analysts expect Apple to post better than expected results for its iPhone sales in the quarter that ended in June.

Piper Jaffray analyst Gene Munster said in a research note Tuesday that he expects that Apple sold 5 million iPhones in the June quarter. The Wall Street consensus is around 4 million.

The App Store is seen as one of the major reasons why the iPhone has been so successful. But can other application storefronts replicate the kind of success that Apple has experienced?

It will be tough. While Apple has made it easy to download and pay for applications, and the company has made it attractive for developers to develop for the iPhone, the real success of the App Store is likely attributed to the fact that it operates through Apples e-commerce service, iTunes.

Virtual stores have always existed for phones. But because so many people were already using iTunes and were already familiar with the interface, it made it that much easier for people to buy mobile applications using the store. Not to mention the fact that these customers also already had a billing relationship with Apple, which has also made it easy for developers to monetize their applications.

But even if all these other companies can't catch Apple, the fact that they are developing these storefronts and encouraging application development should drive new services and interesting applications for consumers.

[Splashes]

Palm is the currently the only company with a chance to compete with Apple, as they have only one device (no market segmentation) and a good OS. All the others have zero chance.

"Google professes it has a long term advantage over the iPhone because it's developer community is more open."

Um, no. Developers write apps when they think they can make money. They make money when people buy their apps. People buy their apps when they have a phone the apps can run on. Android is a platform that will be used to power many competing and incompatible devices, and unless one of those devices can break out and sell in the tens of millions, most developers won't waste their time. So Android's "openness" will guarantee its failure to seriously compete with Apple.

"But so far the new Palm Pre, which uses a sophisticated operating system developed specifically for the device called webOS, only has a handful of applications."

Incredibly awkward phrasing ("device called webOS"?). That sentence needs to be split in two and re-worked.

[blablah999]

Your analysis fails to point out that Verizon -- or any other carrier -- entering the frenzy is a different beast altogether (and, IMHO, absurd). "App sales help handset sales" is the accepted wisdom; carriers don't make handsets. Are people really going to choose, or switch to, Verizon because of the store? Of course not.

[Timothy Bandy]

Apple didn't just make it easy to buy apps, they also made it fairly cheap and didn't try to gouge their customers on stupid things like ringtones and music. Then they allowed customers to bypass using their subscription minutes with the telcos and download stuff over wifi or directly to their computers, something the telcos would have never done. Finally, everything is backed up on the computer, so the customer and instantly restore a new phone to a previous phone's settings and not lose any apps, music or ringtones.

[DrtyDogg]

I might be wrong, but didn't the 1st gen iPhone require you to pay to convert a song to a ringtone?

[Synthmeister]

Yes, but Apple very quickly allowed customers to use GarageBand to make ringtones from any non-DRM song. You can still pay for ringtones in the iTunes store, but why would you?

[jean.luc.picard]

Competition is good!

[cvaldes1831]

Apple has another advantage over the competition that isn't mentioned here. The iPhone has a non-smartphone sibling -- the iPod touch -- that runs most of the apps.

Apple has yet to announce results from its just-closed quarter, but there might be 30 million iPhones plus another 20 million iPod touches out there. That huge extra user base simply doesn't exist for other smartphone platforms. Palm could conceivably release a phoneless Pre to help it compete against Apple, but it's doubtful that it could do it all by itself with just a smartphone.

[csoccer1]

Very true. It was the iPod Touch user base that made up most of the 1.5 billion app downloads. Microsoft will have to base wimno 7/8 off of the Zune HD's OS in order to create one successful app store that runs on all of its devices.

[cvaldes1831]

I don't know the internal workings of the Zune OS, but I'm not convinced that it can be turned into the next WinMo just as Apple could not turn the legacy iPod OS into today's iPhone OS.

What Microsoft really needs to do is to rewrite its entire OS from the ground up, with a thought for designing something scalable (from mobile devices to servers) and runs well on multiple CPU architectures. This might break application and/or hardware compatibility.

However, since Microsoft does not control the hardware side (I'm talking about computers, not the Zune), the challenge would be far greater than what Apple did jumping from OS 9 to OS X.

[app_addict_89]

Considering Palm is not selling outstandingly compared to the iPhone, it would be a waste of their time and money to make a phoneless Pre.

[csoccer1]

Apple has been so successful because the App Store is directly connected to iTunes. Like the article says, most people own iPods and are all familiar with iTunes and the iTunes Store. Apple was smart to integrate the App Store into the iTunes application and allow users to buy applications with their iTunes account or iTunes gift cards. The only way other App Stores will even be able to catch up is if they have a similar ecosystem to Apple's iTunes. For example, Palm and Google should have built custom app stores using Amazon's web site. Amazon is already used for books, music, and movies, so for Google to incorporate it's Android Market with your amazon account would be smart. The Android Market currently only lets users use PayPal to purchase applications, and you can bet most teenagers with the G1 don't have PayPal accounts and are more likely to have an iTunes account. However, Amazon will never be as fluid as iTunes. iTunes is an application to manage and purchase music and movies. Amazon would need to create their own application that syncs with the iPod and other popular music players in order to set up a user base to rival iTunes. A web site won't cut it. I am curious to see how Microsoft plans to set up their marketplace, as Microsoft Points aren't popular at all.

[DrtyDogg]

+1 iTunes integration
+1 Microsofg Points suck

[Mobiworx]

Apple has and will dominate the app market for years to come. Most of the other companies are too far behind and not aiming to the right solutions. get a good phone and you will get the followers. get a young team behind your devl and you will get the right product. most providers come with ridiculous copycat. thats not the way to do it. David Mobiworx

[Adrian Hall Bytemobile]

Marguerite Reardon builds on an interesting phenomenon that is currently playing out in the mobile data industry. Increasingly, wireless subscribers are demanding a simpler and more personalized mobile internet experience that includes customized content and relevant applications at their fingertips. The popularity of the Apple iPhone App Store has demonstrated strong demand for content that is offered in a user-friendly manner. With this trend in mind, network operators will need to deliver added value to their customers if they are to avoid ?bit pipe? commoditization. Luckily, carriers have a major leg up in this area because of their unique visibility into user browsing behavior, purchasing history, and demographic and service plan information ? all of which offer the opportunity to deliver personally relevant applications.

[app_addict_89]

I agree that its good to have a choice when deciding where to buy your applications, but as far as those mobile companies beating Apple's app store is another story on it's own.

I agree with some of the above comments about how Apple has an huge advantage because the company has both the iPhone and iPod Touch support.

AVAILABILITY. Apple already has a store running with useful (and not so useful) apps whereas other companies haven't gotten much or anything for their customers.

COST. Apple makes it easy and cheap (most are free) to get an app. Most mobile companies will automatically charge your bill. With Apple, you can walk down to Target (or Wal-Mart) and buy an iTunes card and your done.

WI-FI. With the addition of Wi-fi on the iPod touches, people who want the features of a smartphone like the iPhone can buy the cheaper iPod touch without any of the data plan and minutes. People can download the applications free of charge (the internet part, not the actual app). Whereas the Palm Pre or Android or Blackberry require you to get the data plan, then charge you for the app.

EASY. Just pop up iTunes and download an app, or better yet, open the app store on your device and download it directly (and fast).

FAIRNESS. Most of the apps on the app store will cater to BOTH the iPod Touch and iPhone. How will someone who has the Blackberry Curve play a game thats only meant for the Blackberry Storm's touch screen? Answer: It can't.

Now if only Apple reduced the prices of their computers, they would be unstoppable.
I'm not trying to hate on the mobile companies. I'm sure they will be successful on their own.
I'm pro-apple, byte me.

[nsmolney]

Check out this post to see why you may want to consider mobile web as an alternative to the plethora of app stores.

http://www.crispwireless.com/blog/09/07/1/appropos-are-native-mobile-apps-supportable-mobile-web-apps

[brwalsh]

Re. the point the article mentions about VZW and other operators developing/considering their own appstores...the real value that mobile internet operators can uniquely bring to this explosion of mobile applications, is not from more appstores. Services enhancement & partnerships are the most viable paths for successful operator business models. Operators can provide access to favorite internet applications while monetizing the value delivered uniquely by their networks. But at the end of the day it's got to be a win-win for operators and subscribers in order to justify continual mobile bandwidth expansion. The monay can't all flow to the mobile OS/handset appstores! See blog post on this topic for further discussion:
https://www.myciscocommunity.com/community/sp/mobility/blog/2009/07/14/mobile-application-stores-what-s-the-operator-play

[Mobile-Marketing-Company]

Mobile Marketing Company - Apple apps are great but I think a lot of third party cell phone apps and the new google phone will change the tide a bit. Apple has a following but they also have a large amount of people who will never buy another apple product. The phone industry should try to utilize the same app engine so they can universally sell apps to different companies and consumers. http://www.WHAMmobile.com build all apps for different phones. and have found that apple is very basic and not that revolutionary.