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have grown rapidly in the last quarter and Nokia has made a big comeback in the smartphone category with a 40% share up from 35% in Q3. So unless a mobile network operator chooses to simply be a dumb pipe, app stores are definitely something they need to think about.

So what can a mobile network operator do? What I have attempted to do here is draw some learning on the success of App Stores. Maybe there is something in there for a mobile network operator to take forward.

The iPhone App Store has managed to do a few major things right in a very short time and in a very big way! It is not just one or two things that it did right but rather a bunch of things that worked together that made all the difference. From a developer’s point of view:

- Crowdsourcing

o iPhone with its Software Developer Kit has enabled literally anybody to make an app, submit it for approval (which on average takes about 4.78 days) and get it up on the app store.o This has created about 28,000 developers for the iPhone who have collectively put together over 130,000 apps to date.o This is not something new. There have been hundreds of developers for the Symbian OS for example but they did not

exist as a cohesive ecosystem like the iPhone app store.

- Simple Revenue Sharing Model

o Apple made the business model really simple - 70% revenue for the developer and 30% for Apple.o Again, nothing extraordinary about it.

However, from a user’s POV, the power really comes from the iPhone UI. It is a key factor. In essence, it is simply very intuitive and user-friendly. But what about the app store? What has it done right for the consumer?

- WOW Factor!

o Applications have given consumers a WOW factor from the Shazam app that lets a user point to any music source and know which song it is to the integration of social networking, document editing, watching videos, GPS navigation, booking flights and hotels, reading books, gaming or playing a prank. The universe is simply endless.o The result - users get to do things they could not have imagined doing on a mobile phone.

- Low Cost

o Besides the fact that there are a ton of apps that are free, about 50% of the paid apps are for $1.o The App Store has challenged the convention of software

pricing and it brought it to a whole new level.o The result – many users are willing to pay for apps (an average app store users spends about $4.37 a month which is equivalent to about 4 paid apps of $1 each).

- Brilliant Payment Model

o Whatever barrier that one may face when making the decision to buy an app has been seamlessly eliminated owing to a simple one-click payment system.o With credit card details securely synced to a user account, all the user needs to do is to tap “Buy Now” and instantly get the app.

- Dynamic Content

o With more and more apps being added to the App Store, the content on the iPhone always remains fresh as the user screens get dynamically updated with each new app download.o Users are unlikely to get bored with all the choices of apps available to them.

All of these offerings combined as a whole, working in synergy, are the key driving factors behind the success of the phenomenon known as the App Store. On the other hand, Android with its open handset alliance is geared to be the fastest growing OS platform until 2013. Growth of its platform combined with a very competitive app store is definitely going to give Apple

a tough time in days to come.But what can a mobile network operator do? The big challenge for a mobile network operator is that it has to deal with multiple handset vendors and mobile operating systems. Making an app store work across systems is not going to be easy. But one thing is for sure, if mobile network operators are to succeed in this game they have to open up and adopt a more collaborative framework. They will have to partner with developers, handset manufacturers and OS developers to create a rich ecosystem for all the players to effectively work together.

The good thing though is that it has the opportunity to integrate payment of apps with its billing system thereby enabling the same brilliance and simplicity of the iPhone app store model. The other advantage a mobile network operator has is that it will have rich location data about its users which it can use to develop some innovative services.

We are seeing both Vodafone and Orange investing in app stores with some big plans for the future. There is definitely potential in the app store business, something that can be explored by any mobile network operator looking to grow their data revenues beyond internet usage.

By Abdul Karim, Strategy Director, Luciola

If we take a look at the big picture, we can clearly see that the future of mobile network operator revenues will depend increasingly on data. Today it accounts for 20% of all mobile network operator revenue globally and is estimated to grow to 33% by 2013 according to Informa Research. Of all data revenue about 50% is expected

to come from Mobile Internet. This is what the iPhone with its App Store is driving at hyper speed. Apps engage users and make them spend more time on their device, this leads to greater usage of data. A research survey conducted by Consumer Reports found that iPhone users consume 5 times more data than Blackberry users and

twice as much data than other smartphone users. With only 40 million iPhones sold to date, the iPhone’s browser (Safari) has a staggering 22% share worldwide second to Opera Mobile Browser at 25%. This is all good news for the mobile network operator as this will only accelerate the growth of their data revenue. But is this enough?

I don’t think so. Besides the fact that Apple smartphone share is only about 16% and in Q4 2009 for the first time its share actually dipped, others are also getting on the applications bandwagon. By others I mean Google with its Android market and Nokia with its Ovi platform. Google’s Android-based smartphones

Can Mobile Operators Ride the App Store Wave?What’s the big deal about app stores anyway? With 3 billion downloads in 18 months and the last two billion downloaded between Jul-Dec ’09 , the aptly named iPhone App(le) store has been nothing less than a revolution of the entire mobile ecosystem. Why do I say that?