App Stores a Farmers' Market, says Frost

David Murphy

The mobile content market, with the advent of the applications (app) store, has brought a new model of mobile content distribution. The app store gives an opportunity to capitalize on direct relationships with consumers, linking them to the brand and offering an easy-to-use way of purchasing a variety of applications. It is similar to a farmers' market, where people can buy fresh products and homemade food, eliminating the middleman and the additional costs associated with buying through an intermediary.
Thats the verdict of analyst Frost & Sullivan. Saverio Romeo, Industry Analyst at Frost, says:
The success of the iPhone Applications Store and the launch of the Android Market for the first Android-based device, G1, gave rise to the phenomenon of applications stores in 2008. 
But the idea of the app store is not a new one, Frost notes. Qualcomm may have been the first to put the idea of an app store into action by opening its Binary Runtime Environment for Wireless (BREW) to software developers, and allowing users of BREW devices to download applications directly to their phones. But this was not a farmers market in the full sense, says Frost. Qualcomm was the intermediary of an exchange between an elite group of users, BREW devices consumers, and software developers who needed to fulfil specific requirements to be part of the BREW catalogue.
The launch of the Apple App Store for the iPhone was a huge success, with 200 million downloads in only the first 100 days of operations. Behind this success, says Frost, there is certainly a very well known brand, but also a model of content distribution that interacts directly with the final user as it happens. This has been made possible because mobile users are becoming increasingly aware of their ability to personalize their mobile experiences. This consideration, and the success of the Apple App Store, have driven the launch, or announcement to launch, many other app stores, including the Samsung Mobile Store, Nokias Ovi Store, O2 Litmus and the Blackberry Application Storefront.
App  stores provide a great number of business opportunities, Frost believes. Mobile network operators and mobile device manufacturers that have direct relationships with users will be able to capitalize these relationships, linking customers to the brand and offering an easy-to-use way of buying a variety of applications. Mobile social networking companies can also play the app store card, as they have communities of users. The opportunities for content providers lie in developing applications and being able to sell them on different stores for different platforms and devices. There are also business opportunities for service and technology providers in the areas of billing, distribution and retailing, storefronts, advertising, and marketing; all elements necessary for a successful store.
The advent of the mobile applications stores has brought a new model of mobile content distribution, says Romeo. There are opportunities for different players of the value chain. The competition between stores will mainly lie on the quality of the catalogue, on the level of interactivity with the users, and on affordable pricing models. In the latter issue, the role of advertising can be crucial. The adventure has just started.
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