Twenty Seven Companies Unite to Kill Apple (Huh?)

Posted on: February 16, 2010
Posted in Mobile, Strategy

Twenty Seven Companies Unite to Kill Apple (Huh?)

Today there was relatively huge news out of Mobile World Congress in Barcelona that 27 companies are uniting to offer an online app store experience to rival Apple’s. Yes 27.

Among the global alliance, 24 of 27 are wireless operators (Orange, Vodafone, AT&T, Verizon, Sprint, etc) with access to 3B customers worldwide. Samsung, Sony Ericsson, and LG are the only device makers.

Absent: Apple (of course) but also Nokia, RIM, HTC and Motorola. Note that HTC and Mot are the two flagship Android device makers. So essentially this alliance is the anti-iPhone / Android / Nokia / RIM app marketplace.

So the question becomes will it really work without the device makers support? (essentially it’s a carrier-driven app marketplace). And what specifically will the carriers do? Here’s some analysis:

  1. Carriers are under continual threat of commoditization. They need/want a marketplace where transactions occur and they already have a billing relationship w/ the subscriber.
  2. App stores are currently run/managed by device makers. In the Clay Christensen sense, the network pipe & apps/transactions are complements of each other and are fighting for a fixed share of the consumer’s wallet. The network pipe is not the future of rev growth… apps/services are!
  3. Wireless is getting smarter – 4G/LTE will provide operators with a wealth of customer info – including device type, service type, location, brand & billing relationship, and session information like time of day. Operators can use this session intelligence to insert data (billing, messaging and ads) and improve the subscriber’s experience.
  4. On top of this, operators can enable cross-carrier app support & share opt-in subscriber info (very relevant to app developers) when subscribers roam.
  5. And finally – back to developers: operators will provide APIs to the developer community. Though not explicit, <strongtoday’s announcement suggests that the wireless operators are joining hands in a global alliance to make the APIs fully open and free.

Great. But why would this be better/different than what app developers can already tap into in the form of existing APIs from the Foursquare’s of the world? Though user data resides in applications (for example when you ‘check in’ via 4Square), operators could provide app developers w/ access to location and end-user preferences directly from the network. This is perhaps another layer of data to augment 4Square type application level data.

This subscriber info could better enable multi-screen experiences by allowing developers to write richer apps which work across different carrier networks and devices. All this contextual/behavioral info provides more effective subscriber targeting.

It’s worth noting that “the king of the internet” Cisco is in on this trend. Cisco just PR’d a plan for service providers based on last month’s Starent acquisition (which was a big deal since Cisco hasn’t really sold into wireless). LTE/4G is a HUGE opportunity for Cisco – mobility is a killer app as the mobile internet becomes ubiquitous (touched on why here). Alcatel-Lucent (supplier of equipment to AT&T and VZ) is also touting networking gear which can combine service and web capabilities to create ‘mash up’ applications.

It will very be interesting to see whether the wireless operators can unite to get in on the app marketplace game. If so, it will hurt Apple’s closed model. Google won’t really care since the Android platform is a tool to weaken Microsoft and sell ads. Keep in mind that “alliances” often lead nowhere, and a lot of infrastructure build-out lies ahead before 4G/LTE is a reality. But outcome aside, the competition for consumer’s wallets is a great omen for continued innovation as the mobile marketplace evolves.

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