The rumour mill has been spinning again this week with talk of Amazon launching its own Android-based apps store and a grand alliance between Internet giants Facebook and Skype. There is a compelling commercial logic behind both stories and, even if they don’t happen, they serve to further highlight the titanic struggle mobile operators face if they want to avoid becoming bit pipes.

Building on its existing MP3 store for Android handsets, Amazon is apparently preparing to launch a fully-fledged app store for the Android platform, according to TechCrunch. This sounds like a no-brainer – it makes sense for Amazon, the world’s leading online retailer, to put its deep retailing and merchandising expertise to good use in the mobile apps market. But for mobile operators, also eyeing the opportunity to become app supermarkets, Amazon will probably be a more formidable competitor than Nokia, Google, Samsung and many of the other existing app retailers.

As retailing is its core business, we can expect Amazon to bring much more rigour, smarter merchandising and more aggressive marketing to its Android app store than Google has so far applied to Android Market, which is sometimes criticised for its lax controls over intellectual property and patchy support for monetisation. Amazon will also likely use its extensive customer data and well-oiled recommendation engines to send customers plenty of personalised marketing missives.

In other words, Amazon can neutralise or better mobile operators’ key retailing assets, such as extensive customer data, a mature billing system and marketing savvy. Moreover, the world’s largest web retailer has much greater scale than most mobile operators, potentially enabling it to secure exclusive content and price its stock very aggressively.

The voice of doom?

But mobile operators’ strategists may lose more sleep over a report by All Things Digital, part of the Wall Street Journal group, that “Facebook and Skype are poised to announce a significant and wide-ranging partnership that will include integration of SMS, voice chat and Facebook Connect.”

As the report notes, the natural next step for Facebook is to round out its communications platform by offering its 500 million users voice calls and video calls, while extending its messaging services into the realm of SMS.

Partnering with Skype would probably be cheaper and quicker than trying to build its own VOIP platform in-house, while potentially also persuading millions of Skype users to make greater use of Facebook. If the partnership fails to keep pace with the emerging Google and Apple ecosystems, Facebook could probably buy Skype at a later date and take full control of a suite of Facebook-branded communications services.

The big question for mobile operators is to what extent Skype will be integrated into Facebook’s popular mobile apps. If the two companies make it really simple to initiate a voice call or video call from within a Facebook app, that could potentially eat into operators’ voice revenues. With other reports suggesting that Apple, under pressure from regulators, has at last agreed to allow the Google Voice app into its App Store, it seems that mobile VOIP is on the cusp of becoming a mainstream proposition.

No wonder then that more and more mobile operators are replacing flat-rate data plans with tiered plans to ensure that they are compensated for carrying all this new data traffic on their networks and the forthcoming slide in voice and messaging revenues. And, if you price connectivity right, being a bit pipe isn’t necessarily a bad business model.

 

David Pringle

This article was first published on the GSMA’s Mobile World Live portal. David moderates discussion forums on the site and is a freelance media and investor relations consultant.

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