Though downloadable Mobile applications is 10 year old industry, apart from iPhone applications there isn’t any other proven business model so far. The iPhone application’s success is derived more from it’s own app store. The success of app store is due to the fact that it made it easy to develop, market and monetize the apps. Here is my shot at looking into crystal ball and trying to define what would be an ‘Indian App store’.
India, with it’s half a billion subscribers and falling ARPUs is fast becoming a hot market for services and rich experience provided by downloadable applications. But we are still far away from becoming a thriving eco-system for downloadable applications. What the application providers lack is an integrated Development, Marketing , and most importantly Monetization platform provided by app stores to create these compelling services.
The question is what kind of ‘app store’ will work in Indian context?
Can Apple app store replicate such an impact in Indian Market? The answer is NO.
Reason:- Apple app store’s monetization bit depends a lot on credit card based ongoing payment relationship apple already enjoys with iTunes subscribers. Apple or any manufacturer currently does not command such an ongoing relationship in Indian market.
Since Telecom operator has a payment relationship with user , can operator sponsored app store create such an impact? Answer is Maybe.
Reason:- With advent of competitive pricing by operators, dual sim phones, and Number portability , this relationship enjoyed by operators is getting thinner day by day. Giving more services on top of vanilla Call/ SMS may help operators to strengthen their relationship with users, time will tell.
What I think will work is an ‘app/ content store’ created by a relatively independent entity. This “App store” will surely have to leverage on the payment relationship between operators and users but still has to maintain cross operator, cross manufacturer compatibility. I also believe that such an initiative will need some sort of regulatory blessings from TRAI.
Of course it’s easier said than done. Let’s try and do a complete SWOT analysis of such a business case. (comments/ improvements welcome)
Strengths
- This can scale to be ‘one stop shop’ for all the user’s downloadable content needs including Wallpapers, Screensavers and Ringtones in addition to applications.
- Positioning as a sales channel for content is a proven method to source quality content.
- Integrated development, marketing and sales platform for content owner makes it much easier for content owners to publish and monetize their content.
- Helps operators to improve ARPU.
- The store can be much more ‘social’ than a handset vendor/ operator sponsored App store.
- Transparent revenue share model.
Weaknesses
- Unproven. There is almost no precedence of such an ecosystem barring NTT docomo.
- No immediate incentive for handset manufacturers ..
- The app store provider will have to build it’s brand from scratch. It cannot leverage much on operator or manufacturer brand.
- A new industry player or a startup may find this space very tough to navigate with mindset of existing players.
- Needs a relatively big capital investment up front to build the relationships and build the brand.
Opportunities
- There are already 500 million users hungry for services and the userbase is still growing fast.
- This can be a marketing platform for all the brands who want to reach mobile users.
- Potential to reach Rural India and create a completely new market for down-loadable services.
- Can finally counter content piracy with attractive pricing models enabled by potential reach.
- Same version can scale to all the emerging markets.
Threats
- Content owners business models could take a hit since there are more players in rev share agreements (operator+app store+ content owner)
- Building relationships with all the industry players will be challenging (manufacturers, operators, content owners)
- iPhone kind of manufacturer->operator alliance may emerge.
- Multiple Manufacturer, Operator app stores may fracture the market
Conclusion :-
Creating an App store for Indian Mobile users is a huge opportunity which you cannot miss at this point. The company with correct capital backing and focus on building relationships in the ecosystem can exploit it to the hilt.
Full disclosure :- Mobisy has a product for app stores based on our popular platform Mobitop. You can see the details about the app store here.
