Thursday, October 1, 2009

The Operators Strike Back: The Next Generation of App Stores (Part 2)

Dave Ginsburg

(This article originally appeared here on 28 September 2009)

Last week I looked at the App Store phenomenon with a focus on how operators are introducing their next-generation portals.

This week, I’ll couple it with a perspective from the developer community, and what it means for the future success or lack thereof of the various Open OS platforms.

Next week I’ll fold in the handset vendor perspective, discussing whether they should spread their development across multiple platforms, or stick to one or two. Their future success could hang in the balance.

It goes without saying that Apple, in a relatively short time, has garnered the greatest mindshare amongst developers, independent of any perception as to the transparency with the application approval process. Apple has built sufficient momentum with regard to the types of applications available and cost points, including a wide variety of low-cost applications, try-and-buy, and ease of application discovery.

The Android Market in contrast is still on the upswing, and according to Admob, it has a ways to go to compete with Apple. The survey found that 55 percent of Android users have not yet downloaded an application from the store, in contrast to only 23 percent of iPhone users. Admob goes on to state that although the checkout process may be holding back subscribers, the real culprit is the lack of quality applications and mainstream software.

Applications are the outgrowth of a critical mass of developers, and as of August, 2009, the iPhone footprint was 40 times that of Android. More recently, Motorola and others have stated that application organization within the Market requires improvement. The new 1.6 release is expected to address some of these concerns.

The veteran, Symbian, claims the largest development community, but to its disadvantage, applications have traditionally been scattered, mostly handled by legacy operator platforms or 3rd parties. Nokia with its Ovi service and Sony Ericsson with its Play Now Arena are attempting to counter this, but their devices each only hold a portion of an operator’s network, and this varies by geography. In addition, users may not naturally gravitate to their handset vendor for applications as their primary financial relationship is with their operator.

On the operator front, efforts such as Vodafone’s 360 could help facilitate application awareness, but operator offerings do not build platform identity or directly address the developer issue.

At the same time, Symbian itself is in a transition to an open source model, and after the ^4 release, applications will no longer be backward compatible. This too will influence application development. Further confusing the Symbian issue is Nokia’s move to its Linux-based Maemo for some platforms and Sony-Ericsson dividing its loyalty across Symbian, Windows Mobile and Android. Neither vendor may therefore be considered as a proponent for the ultimate Symbian appstore.

Perhaps the Symbian Foundation will rise to the occasion, but at present the foundation’s Horizon initiative is more to act as a publisher to make sure that Symbian applications are available on 3rd party app stores such as Ovi, and the continued comfort of developers working within the framework of the foundation is unknown. This could create further fragmentation vs the centralized models of Apple and Android, as developers may need to maintain financial relationships with multiple operators and handset vendors. Additionally, one would expect that Nokia will begin to develop an application ecosystem around Malmo, influencing the prominence it places on Symbian.

Microsoft is only now launching its Marketplace with Windows Mobile 6.5, while the Blackberry App World launched at CTIA in Spring, 2009 enjoys moderate success. Both Samsung and LG also intend to launch stores in the near future, with both positioned as multi-OS in the same way as Ovi and Sony-Ericsson. Finally, the dark-horse platform with a great deal of promise is Palm’s WebOS, though the developer community is still quite small due to a minimal installed base. Nevertheless, in a short period of time and with minimal device penetration, it has garnered mindshare.

The graphic below helps clarify the various relationships. iPhone and Android developers need only maintain a financial relationship with their respective App Stores, and in the case of Android, will develop to a single, controlled ‘flavor’ despite support from different handset vendors (i.e., HTC, Samsung, Motorola, Sony-Ericsson). Developers for RIM take two paths.

The first is via the branded App Store, and the second is to the operator directly. Here, unless RIM’s App World acts as a strong broker, the developer may need to maintain a relationship with each operator. This of course won’t scale. However, development itself is still contained based on strong RIM device guidelines.

Development for Windows Mobile is more complicated. Although Microsoft has announced the Marketplace, it will take time to develop. The developer therefore must maintain a relationship with one or more operators, and at the same time the handset vendors who are launching their own storefronts. Design guidelines may also be more flexible than RIM or Apple, so a developer may need to be cognizant of handset vendor specific implementations. If successful, the Marketplace option could be the best path for the developer.

Symbian is more complex and fragmented, with no strong storefront or broker with the exception of the foundation’s Horizon. The developer at present must maintain a financial relationship with multiple handset vendors as well as with multiple operators. In addition, the various flavors of S60 result in software fragmentation, and the emergence of the foundation only adds to the confusion. Clearly, a better solution along the lines of the Windows Marketplace is required.

Here's a graphic display that I call "The Developer’s Conundrum: Application Development Ecosystems":

Separate from developer support, how do the various OSs stack up with regard to their UI, browser, and vendor support? Credit Suisse recently released a report (Smart Phones...Smarter Investments, Aug 31, 2009) looking at the smartphone market, as well as vendor and OS strengths and weaknesses. As expected, when taking the OS view, Apple is Number 1. Palm’s new webOS is 2nd, though limited in deployment, has some of the same advantages as to the UI and browser, as does Android, which is at 3. In fact, both platforms are close in the ranking and if market adoption was included, Android would be ahead. RIM, Symbian, and Windows Mobile all trail, within a few points of each other. The chart reaffirms the position that Android is the strongest ‘open’ OS (i.e., applications not controlled by a single entity as is the case with Apple). As I mentioned, next week I’ll look at how this compares to the vendor view. So what are the impacts on the developer community?

Ideally, an operator would embrace those platforms that combine large developer communities with ease of implementation. In addition to hardware design and usability, customers no longer wish to be limited to the traditional operator-controlled walled-garden and will seek out those devices with the widest application variety. Other than the iPhone, Android seems to be best positioned here for the mass market and in fact is a more open ecosystem. The success of Blackberry’s App World, Microsoft’s Marketplace, or the Symbian Horizon approach is too early to determine, though they could be more viable within an operator-controlled store. This is the approach Blackberry is taking with Verizon’s V CAST Apps Store as described last week.

Focusing on a small number of platforms will also help the operator or handset to focus its engineering, marketing, and support resources, and will also help to build loyalty by creating a critical mass of supporters . This is the path taken by the more successful operators, and given recent confusion over whether Verizon Wireless will or will not carry the Palm Pre, it is obviously top-of-mind.

Take a look at these Credit Suisse smartphone OS rankings:

Edited by Michael Dinan

No comments:

Post a Comment