Reader Forum: Capitalizing on the application explosion

Editor’s Note: Welcome to our weekly Reader Forum section. In an attempt to broaden our interaction with our readers we have created this forum for those with something meaningful to say to the wireless industry. We want to keep this as open as possible, but maintain some editorial control so as to keep it free of commercials or attacks. Please send along submissions for this section to our editors at:dmeyer@rcrwireless.com ortford@rcrwireless.com.
It appears that mobile consumers have a nearly endless appetite for applications. Research from IDC forecasts that the number of downloaded apps is expected to increase from 10.9 billion worldwide in 2010, to 76.9 billion in 2014, while market revenues will experience similar growth, surpassing $35 billion in 2014. The corresponding growth in traffic is creating an enormous amount of stress on mobile data networks – according to Cisco Systems Inc. the data traffic on mobile networks will increase from 0.6 exabytes per month in 2011, to 3.6 exabytes per month in 2012, alone.
This increase in mobile usage and associated revenue growth is great news for mobile operators – or is it? Unfortunately, while operators worldwide are busily building out their networks to accommodate the increased date traffic and support consumers demand for bandwidth-heavy applications, the current structure of the application value chain means that they are not enjoying any of the benefits. Consumers pay for applications through whichever app store they chose to be part of, downloading the application to their device, but, given the nature of data contracts, pay no extra for the bandwidth required to do so. Clearly, from an operator point of view, something has to change.
Until the introduction of Apple Inc.’s iPhone, the mobile internet experience for the average consumer was patchy at best and this was reflected by the limited uptake in both mobile Internet and application downloads. Apple changed this by focusing on three key areas. First, the company built a strong developer community and adopted a simple revenue share business model. Second, it used the already widely adopted iTunes as a base for its App Store and established simple financial settlement capabilities, making it very easy for the user to pay through the store. Finally, it focused on the device. Developed with a game-changing touch screen interface and a complete range of device APIs for the application developer community, the iPhone continued to build on the already successful Apple brand. With one form factor only, it also simplified the application development process for the developer community. The upshot of these three focus areas was the creation of a compelling proposition for both consumers and developers, changing the expectations of the mobile device forever.
The downside to this is that, as other organisations develop their own applications store, we’re in danger of creating islands – Apple created the original app store with Google Inc., Research In Motion Ltd., Nokia Corp. and Microsoft Corp. all following suit, but without any interactivity between them. If a consumer wants to move from one platform to another, from an iPhone to a Nokia phone, there is no ability to take applications with them and the consumer will incur further cost downloading them all over again. In addition, developers are creating applications that only use the capabilities of the device. The core assets of the network and their ability to make more compelling applications are being ignored.
So while we see explosive growth in this sector, a very fragmented applications economy is being built, one where developers have to choose what device to develop for. There has to be a better way for the consumer, the developer and the industry.
The industry as a whole needs to work out how to eliminate the islands that they have created and develop a common application network to ensure an element of portability between devices. This can be done by following two simple steps. First, the industry needs to come together to develop a common runtime that works across all devices. The second step is to encourage developers to engage more effectively with the mobile network, making use of capabilities such as messaging, location and payment, among others. Building applications in this manner will create an experience that is more compelling, both for the consumer and for the network operators. In this manner, it is possible to build a better mobile internet experience.
The Wholesale Applications Community is working with key organisations from across the industry to lead this transformation in mobile application development. Launched in February 2010, WAC is an open global alliance formed from leading organisations within the telecoms sector. Uniting a fragmented applications marketplace, WAC will create an open industry platform that benefits the entire ecosystem, including applications developers, handset manufacturers, OS owners, network operators and end users. With WAC 1.0 launched ahead of schedule in September 2010, WAC is aiming for commercial launch in February 2011 at Mobile World Congress in Barcelona, Spain, and will be demonstrating WAC 1.0 devices and operator storefronts – a physical example of how portability and network engagement will be able to offer the consumer a much more compelling and engaging application experience while at the same time offering the developer community the ability to develop for multiple devices.
This proposition is what the industry is seeking – a way to engage the consumer and the developer, while at the same time allowing the network operators to reap the benefits of the burgeoning application sector.