I’ve been excited about all of the announcements of mobile application stores that will make it easier for application developers to publish their work and for consumers to download and take advantage of innovative (and sometimes stupid) software. Recently a number of articles have been published that dismisses the viability of all of the application stores announced.
To be sure, many of the application stores that have been announced will never be launched. Of those that are launched, some will even die as their corporate sponsors loose interest without significant revenue rolling in. But I do not believe that we will see a disastrous withering of the application store space and here is why.
First, for many of the corporate sponsors such as Motorola and Microsoft, application stores are really a marketing expense for their handset platforms. They recognize that in order to sell handsets, there must be innovative and useful applications available. This is what captures the fancy of the public and will drive handset sales. These stores are here to stay. They will, however, get competitive to get unique content on their shelves. Look for one of them to undertake an aggressive pricing and revenue share strategy with developers to encourage exclusive content.
Some of the smaller handset manufacturers who can not attract large user bases, however, may find that the marketing expense is not worth the cost. They will not be able to pay to have exclusive content nor underwrite the cost of running an application store at aggressive revenue share prices.
Secondly, big box stores come to the phone. It is possible that we will see stores such as Best Buy and potentially even a player such as Wal Mart come to the small screen. These stores are starting to realize that all software sales are going to head the way of the application store, even desktop software. The barriers to the consumer to visit the store to see a package are shrinking. Already “subscription” services prevalent in the anti-virus space and is really defacto in the personal finance arena as well. (Is Quicken 2009 really that much different than 2008?) Of course, Apple is already the first all digital big-box store…
Lastly, niche stores can make a play. Just as offline retailers have recognized the way to compete with big box stores is to provide deep expertise in a specific area. Look for niche focused application stores to come to the market. I can see some based around games, exercise, location-based services (LBS) as some of the first niche stores. These stores will provide expert advice and support that the larger stores can not offer. At least until the larger stores purchase their brands…
Tags: app store, apple, applications, applicaton store, best buy, iphone, microsoft, motorola, rim, wal mart
