Apple Won’t Be There, But The Impact Of The iPhone Will Be Everywhere At Mobile World Congress
Next week, more than 50,000 people will descend upon Barcelona for the GSMA Mobile World Congress, the largest mobile event of the year. Attendees will hear from some of the biggest names in the business, from Vodafone (NYSE: VOD) and Telefonica (NYSE: TEF) to Verizon Wireless (NYSE: VZ), Qualcomm (NSDQ: QCOM), Microsoft (NSDQ: MSFT) and MySpace. My colleague Dianne See Morrison and I will be there from MocoNews to cover the events live. But already, it’s clear that one topic will be in heavy rotation during the week: the move by handset-makers and carriers to ape the success of Apple (NSDQ: AAPL) and roll-out their own app stores.
Samsung has already confirmed that it will make an app store announcement during the show, while Microsoft is also rumored to be unveiling its store, codenamed SkyMarket, at MWC. Today, Google (NSDQ: GOOG) got a jump on the news by announcing that it was opening up the Android Market to developers who want to charge for their applications. Other announcements are clearly on the horizon: RIM’s BlackBerry store is set to launch any day, and even Nokia (NYSE: NOK) is expected to make an app store announcement next week. It doesn’t stop with handset makers. There’s even hints that wireless carriers are ready to jump in to this arena. Amdocs, one of the big powerhouses for back-end carrier infrastructure, is expected to announce the Amdocs (NYSE: DOX) App Store, a new application portal available for carriers.
Even though Apple told us it won’t be attending MWC, its impact on the industry will be felt everywhere. Its App store has more than 15,000 apps and has recorded more than 500 million downloads since its launch last summer. “They are becoming the 800-pound guerrilla in the room. No one can catch them, even Google,” said Yankee Group Analyst Josh Martin. “The product is finished and finalized and the other manufacturers still have to figure it out…If you want to make money today, you want to make an app for the iPhone.”
Despite the big lead that Apple’s App store has, it won’t be the only player. In fact, some application creators are hedging their bets. Take TeleNav, which creates a navigation application. Yesterday, the company announced its latest application for Google Android. So far, TeleNav hasn’t even benefited from the iPhone since Apple doesn’t allow any navigation applications in the store, but it still sees the importance of the retail outlet on the phone. In addition to Android, TeleNav has versions of its software for Windows Mobile, Blackberry, Symbian, Java and Brew. Co-founder Sal Dhanani said it plans to submit its app to both Microsoft and Blackberry store. What about Samsung, or Nokia? “The Samsung Blackjack 2 and the Instinct are top phones for us, and they have a huge presence in the U.S. How do you say no to that?…About 40 percent of the phones are Nokia phones. They aren’t a big player here, but we are an international company. How do you say no?…We’ll have to roll up our sleeves and get at it.”
So far, TeleNav’s best business relationships haven’t been through app stores but through the carriers. That’s in contrast to many developers, who look at the App store as a way to get around the carrier. With app stores, developers can move more quickly, keep a larger percentage of the revenues to themselves, and may have fewer restrictions on what can be rolled out. But the carriers were the ones to have the original storefronts. Their portals and decks have been selling applications for years. Still, they are the ones left looking like the legacy players who have not kept up with the times.
At MWC, the carriers will have to explain how they plan to compete. The big thing the carrier still has going for it is that it owns the billing relationship with the customer. Apple uses iTunes; BlackBerry will use PayPal; Google is using Google Checkout. But those services don’t stack up. Carriers have sophisticated billing systems, which, for instance, can expire applications after a month-long trial or allow for monthly subscriptions — something others don’t offer. Dhanani admits: “It would be simpler if we went through the carrier.”
Apple recently announced that there were 20,000 apps in the store and by now that number is probably around 22,000 or so.
I think you give the carriers too much credit. I use ATT and they still haven't figured out how to send a single bill for my fixed and mobile phone. Hardly sophisticated billing. If you use Apple's Itunes store as an example. It can perform all the functions you describe, but just not currently for Iphone Apps. I can subscribe to podcasts. I can rent movies which expire after 30 days. I can buy tv series on a subscription. I can rented movies amongst authorized devices. I can buy via the web or OTA and via the current connection. The system tracks all my purchases and then combines recent purchases into a CC transaction. The system supports gift cards and promotions. I would consider this pretty sophisticated and with over 75M customers I would say their service stacks up well to most carriers
It's not just the Apple Apps Store that is the big influence but the GUI and overall functionality of the iPhone itself.
Witnessed by all the me-too wannabe iPhone look alikes. Without a real iPhone for comparison, some of the copycats would be difficult to separate.
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Pat — I think you have a lot of valid points. Apple does have those capabilities online today, and I think we'll start seeing some improvements really soon when it comes to the iPhone and the ways developers can sell their applications. The carriers have an uphill battle, and they should leverage the things they are good at as soon as possible. Think about it this way: People are saying "I want an iPhone," or "I want a Google phone," or "I want the new Palm." Something Amdocs is trying to do is help carriers differentiate themselves, so people would say "I want an iPhone on AT&T's network." There's no compelling reason today, other than the fact that you have to buy it on AT&T's network. In fact, people are even trying to jailbreak them so they can put them on other networks. On feature phones, I think they are some differences today, but we'll see if they can pull it off in more open environments, like smartphones.
Tricia
I think apple positioned itself well so that they don't have to be everywhere and yet their product, due to integration, is in the mainstream.
Tricia – I feel there is one simple and massive difference between Apple and the carriers. Apple have a passion for their customer experience and go the extra mile to deliver on that belief. For years the other manufacturers have done their best to produce attractive and in some cases good devices while the carriers have shacked these efforts and focused on increasing arpu with scant consideration for the perceptions being built up in their own customers minds. When Apple looked at entering the phone market they must have laughed at the enormity of the open doorway the incumbents had created. Rather than thinking of 'smartphones', or as Steve Jobs calls them 'not so smart phones', should be a basic phone on steroids, Apple looked at the mobile devices of the future being miniaturized laptops. All it needed was a good (brilliant) device, with a well honed operating system, an all you can eat data connection, open access to the web, AND an open developer environment with a beautifully simple and seamless store front/purchasing experience. Hello iPhone. Really no one cares about the operator… It's all about giving the user what they want, when they want it, simply and easily, without constraints. No wonder Apple will not be attending Barcelona, they have nothing to learn.
"No wonder Apple will not be attending Barcelona, they have nothing to learn."
…and nothing to prove.