The Wholesale Applications Community (WAC) – an operator-led group aiming to provide an open international applications platform that could take on the might of Apple’s App Store and Google’s Android Market – this morning announced its official company formation, business model and plans for the next few months, as well as its biggest development to date; the planned integration of the Joint Innovation Lab (JIL) into the initiative.
Former JIL chief executive Peters Suh has been named CEO of WAC, whilst a board of directors comprising top execs from 13 tier one operators, in addition to a GSMA representative, has also been named. Carrier names on the board include AT&T, China Mobile, Deutsche Telekom, NTT Docomo, Telefonica and Verizon. Michel Combes, Vodafone’s chief executive for Europe, has been elected chairman of WAC, and Jean-Philippe Vanot, France Telecom’s deputy CEO, has been named vice-chairman.
It’s the partnership with JIL, and the election of JIL’s Suh and Vodafone’s Combes as CEO and chairman, respectively, that is likely to generate most industry attention. JIL is a joint venture between Vodafone, Verizon Wireless, China Mobile and SoftBank Mobile that was set up in 2008 to develop app-like services accessible to a combined customer base of 1 billion. By combining JIL and WAC, analysts believe WAC has already overcome one of its biggest obstacles. “It would have been a potential showstopper if JIL had remained separate,” IDC’s research director for consumer mobile, John Delaney, told Mobile Business Briefing. “Electing Combes as chairman is also sending out an important message regarding the JIL integration.” The deal with JIL is expected to be completed in September 2010 and will see approximately 8,000 JIL-based applications moved into WAC.
As expected, WAC has confirmed that the BONDI initiative has also moved into WAC. “To get agreement from JIL and BONDI is pretty good progress so far,” commented CCS Insight‘s director of devices, software and platforms, Geoff Blaber. “They realised that to make this work there can’t be three different flavours, and there needs to be consistency for developers.”
So now that WAC has got the basics sorted, how will the business model work? The idea in theory is that WAC will be the most appealing app initiative for developers, by virtue of the multi-billion customer base offered by its operator members. WAC will sit between the developer and the many different operator app stores, serving as the point of submission and certification for apps, and then distribution. Developers will be able to set their own price for their apps and can choose which operator stores they wish their app to be included in. In the spirit of free competition, operators will be left to determine their own revenue share with developers (although the industry standard 70/30 split is likely to be the most common deal). Consumers will purchase apps either via operator billing or credit card payment. Once the operator has taken its cut of the app purchase revenue, WAC receives the rest (majority) of the app revenue, takes a small transaction fee (intended solely to cover the initiative’s costs) and passes the rest of the revenue onto the developer. Worth noting is the fact that WAC itself is unable to set a standard revenue share agreement across the initiative, for legal reasons.
“The big, big draw for developers is going to be the consolidation of the route to market,” believes CCS Insight’s Blaber. “The market is awash with different software platforms and distribution formats right now. An aggregation of storefronts and the introduction of a clearer route to market through WAC should be pretty appealing.” IDC’s Delaney concurs: “The market WAC is fighting for is developer commitment. WAC is designed to give developers a bigger audience.”
In terms of timescale, WAC promises to publish “initial materials/documentation for developers including details of the roadmap and a preview of the WAC specification” in September, before the November publication of its “initial specification and components of its SDK to developers.” November will also see WAC hold its first developer event. Then, in January next year, WAC will release the final WAC 1.0 spec and SDK.
The WAC initiative is keen to stress that the spec will be based on W3C Web-based standards and will provide backwards compatibility for devices based on the current JIL and BONDI specs. By the time of the GSMA Mobile World Congress in Barcelona next February (which will be a year since the initiative was first announced), it is hoped that users of BONDI or JIL-compatible devices will be able to download apps available via WAC-based operator app stores. The event will also see WAC 1.0 demo devices on show, before the first release of commercial WAC 1.0 devices in May, fully supporting WAC-based operator app stores.
The initiative noted that global rollout won’t happen overnight in every country, but will be a gradual deployment. It is also expected that roamers will not connect to a local operator app store but will be linked back to their home store whilst travelling.
With May 2011 almost a year away, and the phenomenal pace of growth of existing app stores, there is a concern that WAC’s efforts will simply be too late for the initiative to become a major market player. CCS Insight’s Blaber highlights a different point though. “I see WAC as less about taking market share from those established stores and more about extending down into the lower end where Java has really failed to take off. It’s about broadening the opportunity.” Blaber sees greater potential success for WAC in the development of more basic apps that can be created with Web-based tools, rather than fancy, rich 3D gaming apps. In addition, Blaber believes there is a strong likelihood that operators will look to incorporate WAC technology within a high proportion of their device portfolios. “The question is, how low can they push this? Given that Android is down to EUR115 already there is a pretty big opportunity to get this on a massive range of handsets.”
On a webinar this morning announcing the JIL deal, interim WAC CEO Tim Raby echoed this sentiment: “We do not expect this technology to be exclusively limited to smartphones. We expect it to work on lower end devices and platforms such as Samsung’s bada. There’s a number of devices out there we can target on price and performance. We want to support as large a population of devices as we can in the portfolios of operators and we have the support of many device vendors. In fact, there’s already a substantial number of devices out there supporting JIL.”
IDC’s Delaney is less convinced by the opportunity at the low-end, citing the fact that “Android is already pushing the market down and WAC will not be the only party addressing this sector.” However, he does feel that with smartphone popularity booming (and most of the market still untapped), there remains a major audience for WAC in 2011. “There will still be an awful lot of first-time smartphone buyers out there when they launch it,” he noted.
As an aside, Delaney remains unconvinced as to whether operators should actually be getting involved in the retailing of apps: “There are clear reasons for device vendors to get into this market, but I haven’t heard a compelling reason for operators to sell apps as a core contributor to their business.”
In addition to its 20 or so operator members, WAC also has the support of device vendors LG, Samsung and Sony Ericsson. AT&T, NTT Docomo, Orange, SoftBank, T-Mobile, Telefonica and Vodafone are leading the initiative.
Interestingly, WAC appears to be keen to follow rivals Google and Apple into the app advertising space, promising “in-app advertising monetisation” that will allow ads to be served in an application. This move is part of plans for future releases of WAC – as well as “in-app op billing” (enabling users to make additional purchases from within an application) and “in-app telco enabler monetisation” (making use of operator network capabilities such as location to enhance apps) – but no specific details were released.