How many ‘app stores’ can the market support?

It seems you’re nobody in wireless if you’re not building – and bragging about – your app store.
Apple got the ball rolling, of course, by opening its iPhone to developers and adding an on-device storefront, and its unqualified success has sparked a flurry of activity in the mobile software-distribution space.
Google Inc. last week unveiled details about Android Market, the storefront that will support its long-awaited entry into the mobile space, and Microsoft Corp. seems poised to launch a marketplace to support Windows Mobile 7, slated for release sometime next year. Further, U.K. carrier 3 has joined the craze, teaming with GetJar to deliver free applications to subscribers, and other operators are sure to follow.
Indeed, “free” is a key component of the new storefronts – roughly one-fourth of Apple’s App Store goodies are offered gratis – and user ratings have quickly become an important element too. Those concepts appear to have trickled down from high-end devices to lowest-common-denominator phones last week as Mobango, a Europe-based portal, used new “App Store functionality” to push its free wares, including the Greystripe game “Horse & Pony – My Stud Farm” and a disturbing clip of a man “talking” though his ample belly.
Sigh. Sometimes you get what you pay for.
Regardless, it won’t be the visible features that separate the new “app stores” from venerable players like Handango and Handmark, which have dominated the quiet space in recent years (even if they never used the freshly-minted “app store” term).
Instead, it’s developers who will determine which app stores gain traction while others fall by the wayside. Those stores that encourage innovation – through simplicity and wide access to a phone’s technologies – will be key. Discoverability is another crucial element, since users will gravitate only to stores easy to find and use. And revenue-share models are sure to play a huge role: Google is keeping its fingers out of the pie, leaving carriers and developers to negotiate their own deals; Apple takes 30% of revenues and gives the remaining 70% to its developer partners. Other players will surely toy with different splits.
How many app stores the market can support is unclear, of course. It seems the smartphone-distribution field will support a range of players, from device-specific storefronts (App Store, Android Market) to warehouses (Handango, Handmark) to carrier-branded sites. But while some of the new app stores may look very similar to established sites where early adopters have long browsed for new smartphone applications, it’s the behind-the-scenes business of building an ecosystem where developers can thrive that will separate the winners from the losers.