Reality Check: Shifting dynamics in mobile application distribution and monetization

Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.
In 2009 the app-store gold rush induced “headless chicken” behavior within the mobile industry on an unprecedented level – more than a dozen original equipment manufacturers and operator app stores were announced or operational alongside another dozen app stores from a multitude of stakeholders from chipset manufacturers to platform vendors. This is not a completely unusual phenomenon for the mobile industry, which has seen its fair share of booms and busts. So, is there an enduring trend that will follow the inevitable shakeout? And are we starting to see the beginning of this shakeout?
Bubbles and shakeouts are healthy. The bubble or gold rush period creates the surge of innovation and awareness, while the shakeout marks the point at which an ascendant technology is ready to take center stage. The “also-rans” fall away, the real winners leverage their core strengths, and there is an understanding of what separates one from the other. Similarly, the current mobile application landscape is very likely to crystallize from today’s chaotic maze into a broad struggle between the major carriers, and new service provider/platform entrants to the mobile marketplace such as Google Android and Nokia Ovi.
The reason for the pending shakeout within mobile applications is the current lack of scale displayed by most of the current purveyors – both in terms of distribution of applications and developer mobilization. The lack of portability across multiple platforms and devices is precluding the critical mass necessary to generate successful and sustainable developer business models. Furthermore, proprietary and esoteric development environments are imposing a high barrier to entry for developers, necessitating a large upfront capital and time investment and extending the time to market for their apps. In order to achieve scale, consistent and ubiquitous enabling technologies such as Linux, LiMo Platform, Web and BONDI will need to be leveraged into SDKs and app stores.
The route to mass market for mobile application distribution will be through over-arching application distribution infrastructures that can host products spanning a range of common application runtimes and multiple native application environments. This “meta-app store” vision is shared by the Wholesale Applications Community initiative announced at Mobile World Congress, and will achieve scale by leveraging key enabling technologies such as mobile Linux, BONDI and the Joint Innovation Lab in a strictly non-religious manner. These technologies offer seamless portability, faster time to market and a lower barrier to entry for developers, most of whom are already familiar with these de facto standards.
Web technologies will also assume a broader and more crucial role in the distribution and monetization of mobile applications. The mobile Web is being enabled by the large proportion of mobile devices that feature a full Web browser (supporting Javascript, HTML and CSS), compelling user interfaces and flat-rate data plans provided by operators. In addition, mobile Web apps can be accessed by any Web-enabled device, thereby facilitating seamless transition across various form factors and device categories. The commercial spoils that result from this will be mind boggling because the device/telephony mash-up means that the mobile consumer is fast becoming the “only consumer.”
Mobile operators, moved to action by the new macro competitive factors, can be at the helm of the next generation of app-stores. As evidenced through deployment of advanced operator services such as Vodafone 360 as well as the formation of strategic consortia such as LiMo, the Wholesale Applications Community, BONDI, and JIL, operators are clearly beginning to harness the decisive advantages that they hold within the new mobile world. Such advantages include incumbency, trust of mobile consumers, technological independence and the wealth of critical latent information assets within their systems including geolocation, call history, billing/contact data, proximity, presence and relatedness. Relatedness is a deep and powerful dimension which has yet to be exploited commercially – the operator can determine reasons that bring two or more individuals together in particular location, the connection between them, what they may share in common and how it relates to that particular location. Putting this information at the disposal of developers through rich APIs will enable new classes of applications that provide highly differentiated experiences to the consumer.
There has never been such an exciting time for the mobile industry and all stakeholders stand to benefit immensely. Operators, who have often (and prematurely) been written off as dumb pipes, have a fantastic advantage with their scale and yet to be exploited information assets. Developers, no longer constrained by vertically integrated systems and technology dead-ends, will be able leverage open, future proof programming environments to target the broad mobile user base and beyond. And the ultimate winners are mobile consumers who will have access to the most innovative and highly personalized mobile experience.
As Director of Global Marketing for LiMo Foundation, Andrew Shikiar is responsible for helping develop and articulate LiMo’s vision and market strategy. Shikiar possesses significant strategic marketing and business development expertise in cutting-edge technologies and market-shifting industry initiatives.He served as Membership Director for industry consortia the Liberty Alliance Project and Blade.org. At Sun Microsystems he helped drive the company’s Java and Liberty Alliance launch initiatives. In addition, he was a founding executive at Radical Communication, where he helped raise nearly $20 million in venture financing and drove market adoption of interactive video and email marketing technology solutions.