Vodafone: Setting out the operator stall in the mobile apps sector - Mobile World Live

Vodafone: Setting out the operator stall in the mobile apps sector

29 OCT 2010

The mobile app ecosystem is a complex place, with operators, handset vendors, platform companies and third party stores all working to woo developers in order to deliver the most appealing apps to consumers. While much of the focus has been on Apple’s App Store, Google’s Android Market, Nokia’s Ovi and RIM’s BlackBerry App World, the mobile operator community is not resting on its laurels, both in working to offer native and Java apps to customers, and through the Wholesale Applications Community (WAC) initiative to create an improved cross-operator, cross-device proposition for developers and consumers.

As a founder member of both WAC and the JIL initiative (which preceeded WAC), and as the world’s second-largest operator by both connections and revenue, Vodafone Group is playing a central role in the development of the mobile app industry. Its participation in the market is based on delivering a high-value experience to customers rather than solely generating revenue, according to Hemant Madan (pictured, below), Head of Developer Marketing for Vodafone Internet Services.

“Apps or content by itself is a healthy revenue stream. Let’s say it’s not going to break the bank, but it is a healthy revenue stream. But the bigger objective here is not just direct revenue, the bigger objective is to give customers an excellent experience, and the consumer experience that they expect today when they take a service.”

The benefits of operator distribution
While the appeal of Vodafone’s sizable customer base should not be underestimated, Madan says that it is its knowledge of customer behaviour that sets it apart from rival app stores. The company is the “last mile and the real touch point” for its subscribers, enabling it to recommend products based on their download or browsing behaviour, generating four times as many downloads as a static promotional page. “That is a very big plus point for a developer, because instead of them being buried deep down in thousands and thousands of content items, they get potential exposure to the right consumers,” he says.

Vodafone also offers a “very vibrant” set of promotional opportunities for developers, in order to raise the profile of apps further. Developers can request, or can be editorially selected by Vodafone, to have their application featured more prominently. With customers able to rate and review apps, the potential for strongly performing apps to do even better is increased, and this consumer feedback can also be valuable for developers looking to tweak their app to improve their performance. In addition to providing content recommendations to users of smartphones with native client software, Vodafone offers the same features via the browser for mid-tier device owners.

These opportunities to increase app discovery are supported by the availability of operator billing, enabling customers to pay for apps directly via their Vodafone bill – creating an end-to-end content discovery and fulfilment chain managed by a customer’s chosen mobile operator partner. The conversion rate for paid apps when using operator billing is “a lot higher” than for other payment methods, Madan says, echoing comments from a number of other participants in the app store value chain.

App store alternatives
Vodafone is currently offering apps through an integrated storefront that also includes content such as ringtones, wallpapers and other personalisation products. As with many other app stores, Vodafone is playing something of a gatekeeper role. Madan states that “we are not blocking anyone, but we are doing QA [quality assurance] on the application.” For apps that do not pass through the approvals process, Vodafone is providing feedback to developers.

Against a backdrop of criticism from developers about the user experience delivered by Android Market, Vodafone’s own 360 Shop for Android provides an alternative that is finding support from the developer community. “The developer doesn’t really have to do anything different than they’ve already done, they’ve already built an Android app. They may be putting it up on Google’s marketplace, which is fine – we’re not asking for exclusivity here. But what we find is that a lot of the developers that we are working with, especially games developers, are actually preferring the carrier store to the Google marketplace.”

The intention is also to offer a Vodafone Shop application for Nokia’s Symbian handsets “over the next couple of months or so,” meaning that Vodafone has its main smartphone platforms covered. This is complemented by a web-based store for handsets where the on-device client is not available, which also includes mid-tier feature phones.

There is one area where Vodafone has its hands tied: Apple’s iPhone. “In terms of the applications and content business, the Apple App Store is a closed ecosystem, and that is obviously Apple’s decision. Good or bad, that is a decision we have to abide by. We do put some content differentiators inside the App Store as well, like the Vodafone contacts app,” Madan says.

Growing app momentum
While games remain a “big revenue generator” for Vodafone, away from this category Madan says that “the biggest consumption typically happens around apps that help the consumer get better access to the local environment.” Apps falling into this category include railway timetables and route finders or local amenity guides. In addition to categories such as social networking, media and entertainment, Vodafone has also noted strong use of ‘seasonal’ applications, for example related to sporting events or festivals (Madan cites the 2010 World Cup as an example), although these have a limited shelf-life unless they subsequently evolve to support another event.

Madan also notes that the growth in popularity of apps has built on a growing momentum in the mobile internet space, making it easier to package content so that it can be easily accessible from a smartphone. “Has the phenomena of the app, and having the icon on the device, increased the consumer consumption of the content? Possibly yes – I don’t have any data to back it up, but gut-feel, possibly yes. Are apps going to be the only way that people access content? Probably no. Some people will prefer using browsers, some people will prefer using an app.”

And will apps continue to be a large opportunity in the future? “I think for the short term, yes, but this industry moves so fast that you never know,” he says. “Next year maybe there is something different; a new technology, maybe.”


Steve Costello

In the second part of our Focus, we will look at Vodafone’s engagement with the developer community and WAC.


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