Carriers, retailers woo developers as they court customers

The carrier deck is still the most valuable real estate in mobile content, but the future of downloadable wireless goodies may just lie in third-party storefronts. And for now, at least, developers are the key to success.
Apple Inc. stole headlines two months ago with the launch of its App Store, delivering 10 million downloads during the opening weekend of the storefront and averaging an astounding $1 million in sales during the first month. Google Inc. plans to follow suit with Android Market, a free-for-all that will allow developers to upload applications at will and will feature YouTube-like ratings from users. And Microsoft Corp. appears to be planning a similar effort: tech enthusiasts last week sniffed out a job posting from the software giant seeking a senior product manager for Skymarket, which appears to be a planned marketplace for Windows Mobile 7, slated to come online sometime next year.
Online application retailers are nothing new in mobile, of course. Storefronts such as PocketGear, Handango and Handmark have long delivered smartphone apps to early adopters, and GetJar – a 4-year-old distributor of free smartphone offerings – has quietly gained substantial traction, recently delivering its 300 millionth application. T-Mobile USA Inc. is rumored to be working on an App Store-like system, and other carriers may follow suit.
And just as all those storefronts are vying for customers, they’re increasingly competing for the attention of developers. Google hopes to differentiate its effort by employing a laissez-faire strategy. Unlike Apple, which has already dropped several applications due to objectionable content or ridiculous price points, Android Market will allow developers to distribute anything they’d like.
They’re also dangling cash: Google is in the process of doling out $10 million as part of the Android developers challenge it announced late last year; Kleiner Perkins has created a $100 million iFund for iPhone developers; and Research In Motion is hoping to fuel development with its $150 million BlackBerry Partners Fund.
“If you don’t have people developing compelling services or applications, you’re not going to get the customer over the hump of, ‘Why am I upgrading my device or service plan?'” said Kevin Packingham, senior VP of product and technology development at Sprint Nextel Corp., which earlier this year unveiled Titan, an attempt to lure desktop developers to mobile. “Developers are usually at the mercy of the carrier to promote their services and get them certified, but we’re trying to change the rules a bit. . A big shift in the coming months will be creating a more developer-friendly environment.”
Handango, meanwhile, is hoping the rising tide of activity can help lift its venerable boat. The company is pushing aggressively to move beyond tech-heads and into the mainstream by inking distribution deals with Sony Ericsson and Best Buy Co., and in recent weeks has inked deals to work with Electronic Arts Inc. and CapCom to deliver high-profile mobile games to smartphone users.
More importantly, though, the Texas-based company is marketing itself to developers as way to reach a broad range of customers through a single distribution channel. And it will need to differentiate itself as the market of high-powered devices evolves from niche to mainstream, driving price points down and changing revenue-share models for retailers. Handango and PocketGear typically snare 40% of download revenues, for instance; Apple pockets only 30% of App Store sales and Google has yet to offer financial details regarding Android Market.
“We were founded in 1999, and many of the relationships we have (with developers) have been established over many, many years,” said Bill Stone, Handango’s CEO. I think the thing that developers see in us is that we’re a trusted partner and we’re agnostic. Everybody else has an agenda, has a device or an OS to sell. With all the fragmentation it’s become increasingly confusing for developers. So I think it’s a great opportunity for us to partner with those developers.”
Reporter Allie Winter contributed to this article.