What Is The Long Term Market Viability Of App Stores?


Whilst Apple’s app store to date has so far been a resounding success, TMV asks what are the long-term prospects for app stores in general? As usual Apple was the first to innovate in this area. However, the fact it was the key innovator in this marketplace does not preclude it from losing its crown. Nokia launched an app store which to date has been pretty abysmal in terms of uptake, although this probably has more to do with the clunky nature of the Symbian OS which has been deterring consumers in there droves.

Android recently overtook Apple’s iPhone in the daily activation stakes in the US and now leads Apple in the smart phone market-share stakes. Whilst Nokia, despite its lacklustre user experience is clinging onto its dominance with a 41% market share. What does this say to TMV? Quite simply, consumers still have not made up their mind in terms of their favoured mobile app ecosystem.

However, TMV wants to delve a little deeper and examine the long-term opportunity in the mobile app and tablet market place on a global level. Apple may have over 100,000 apps within its app store, yet how many actually provide a demonstratable benefit to the consumers that downloaded them. With that we mean how many consumers regularly use all there apps? What are the dropoff in usage rates in terms of apps?

How many consumers actually have the option of porting their apps to a new device if they make the decision that the current device they use does not meet their usage requirements?

If consumers are locked into Apple and Nokia’s closed ecosystems, as a consumer of paid for, and free apps alike, they become useless once the consumer decides to move device. In some cases where anti-consumer operator-device exclusive deals have been locked down and the consumer decides due to under-performing operator network coverage to change carrier they will be left with unusable apps. As the music industry discovered to its own detriment, you cannot control what the consumer wants to do. Device and OS manufacturer attempts to control consumers do so at their own peril.

It’s quite straightforward really! Consumers quite rightly, should be able to purchase content or an app and use it across devices for their own personal use without experiencing restrictions and incompatibility issues

TMV asks what happens when users of closed app ecosystems decide they want to upgrade to a different brand of device? Firstly, we predict that there will be a backlash in terms of the fact that the consumer’s current apps purchased within a closed ecosystem environment will be rendered useless.

The fact Google’s Android’s app ecosystem is open to all networks and offers device choices from the majority of mobile handset manufacturers surely provides for a more viable long-term consumer offer? When consumers become more educated (probably after being burnt once by closed app ecosystems), TMV envisages closed ecosystems losing market-share and at the same time also witnessing increasing churn rates. Whilst on the flipside logic dictates that open app ecosystems by their very nature will grow market share and dominate due to consumer choice in both devices and mobile operators.

Open ecosystems will no doubt continue to outgrow closed ecosystems in terms of both consumer uptake and app consumption. The fact that they also thrive on allowing wider consumer choice instead on crushing consumer choice can only serve to reinforce their long-time viability. According to “off the record” discussion’s; a number of telcos TMV have spoken with state that they have witnessed 2:1 and in some cases 3:1 Android handset vs iPhone handset activations in there respective markets for Q2. Obviously, many are also confident this is set to increase further.

Most importantly, the music industry suffered an incredible decline because it refused to allow unrestricted access for personal use to its content until EMI broke the fold in 2007. The music industry has moved on and now realises that open access is what ensures consumer loyalty and generates long-term value. Owners of closed ecosystems would do well to learn from the music industry’s initial mistakes. It does not matter that we are talking about devices or apps, the restriction of consumer choice and in-compatibility of devices and content usage across them in terms of apps is a highway to a decline in certain companies businesses.

TMV predict that 2011 will be the year of the Android OS, and will quite likely see it overtake Nokia’s smartphone market-share crown. The imminent release of the Google/Android music proposition will also add to pressure on Apple and Nokia alike to open up there absurd reliance on outdated closed ecosystem business models. The mantra of mobile and app business 2010 – 2020 will be interoperability interoperability interoperability! This will be driven by the consumers and TMV are pretty sure Google gets this….we are yet to be convinced Apple or Nokia understand this.

Other Readers also Read:

Is Apple’s Walled Garden Sustainable?

Apple iTunes Entering the Music Subscription Market?

The Digital Britain Bill – One Step Forward or Two Steps Back?

Trying to Get a Bite of the Apple

Apple Devices are Sexy: But are They Reliable?

Here Comes the Droid

Next Mobile Battleground is Music Subscription Services

Motorola’s Milestone (the U.K.’s Droid) Flies Off the Virtual Shelves


Jakomi Mathews – Founder & Editor, The Music Void

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