Customers no longer need to go to the physical retail store of a carrier to shop for software, or have to ‘Google’ their way through the web to find the right application: they can simply access a centralised place for applications (the app store on the phone), and download what is needed. The payment mechanism is smartly tied to the user account, so there is no hassle with that. While Nokia tried this already way back with Nokia Download, the first ever suite to download apps, it was not until Apple’s App Store when the phenomenon really hit the mass market, with the user experience, payments and, most importantly, supply and demand for apps, all in balance.

The vast amount of mobile app stores is a challenge, too. Discovery will be increasingly important in the future: the customer should be able to discover the right apps and content easily. Behavioural targeting, sophisticated recommendations, and smooth search listings are significant. If a customer searched for, let’s say, mobile currency converter apps, there are hundreds of options to choose from. There is the challenge that it takes time to find the right app for the purpose, and successful platforms and app stores need to figure out better ways for users to adopt and find the right apps which provide value for them.

What is the reason for the success of apps in the mobile domain? According to Zokem’s research, one of the most fundamental aspects is perceived usability and overall user experience. Mobile web browsers are no doubt evolving, with the most recent smartphones supporting HTML 5, Flash and other powerful web technologies – which is a good thing. However, there are still elements – like the small screen, rendering power of smartphones, limitations of web-site based application logic, offline use etc. –  which make web browser based applications in most cases unsuitable, or user interfaces sub-optimal for mobile screens. It is easier technically to guarantee how an app looks, how it works, and how it delivers value to the user compared to web apps.

Monetisation has also become easier with app stores – for the first time in history, mobile app developers are actually making some money, and distribution is not a challenge any more. All major platforms, including iPhone, Android, BlackBerry and Symbian, have sophisticated app stores in place, and the biggest 3rd party app stores – for example GetJar – are not that far away from the true promise of providing platform-independent access to apps.

Partially driven by the second factor of monetisation is growth of the mobile app ecosystem, meaning there is enough supply – the required long-tail – to get the end-user interested enough to explore what is available in app stores, creating the massive demand for apps that are provided in the app stores, numbering around some hundreds of thousands in total. For every mobile subscriber, there is something very specific and useful in the app stores, and therefore the ecosystem is in place to make apps into a real business. 

The bigger question is whether the ideology of apps (traditionally more controlled, closed platforms) collides with the ideology of web (more open, free, no control) in the long-term. In many historical examples, like NTT Docomo’s iMode service platform, Apple iPhone smartphones (hardware), and the first versions of IP-based telephony services by telecom operators, a more closed approach has initially succeeded, but then more open and in many cases lower cost solutions have disrupted the market and challenged incumbent players. For Docomo, the challenge has come from non-NTT-controlled smartphones during 2009 and 2010; for Apple it has most evidently come from Google’s Android platform; and for IP-based calls it has come from Skype and other players offering low-cost freemium model services.

There is no one single answer for this question about openness in mobile – for now. It could be that iPhones will remain as the very high-end of the market, whereas Android phones will be pushed to lower price categories. Interestingly at the moment Android is the only platform covering both customers seeking truly low cost phones (in India they sell Android devices for less than US$100) and very advanced high-end business users. Likewise, web is not the only open way to provide apps; Android Market is a largely uncontrolled way to get distribution for your app. Only the future will tell where the market will converge in terms of operating systems, and the apps vs. web browser balance.

Hannu Verkasalo

The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members