12 Comments
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I agree they should stop fighting the likes of App Store. But let’s concede that it takes industries time to emotionally accept new realities. If you read Mobile trade press, you’ll often hear expressions like “critical role in the value chain” or “mobile operators own the primary customer relationship”. These are fast becoming conceits, but getting rid of them is like throwing your dear ol’ grandma off a cliff. I understand the resistance and also believe it to be futile.
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Nick,
I agree with your fundamental point, however I think the carriers can retain a critical role in the vaue chain. No matter how great the device, if it has no reception or basic things like MMS (sorry couldn’t help it), what good are they? I also hope that ultimately they will see that they won’t be throwing grandma off the cliff. Maybe they could find her a cool app for her device?
Philippe 0 0 -
John Tremblay
Philippe,
As we make progress in the world of openness with handsets/OS and app platforms, we cannot forget the net effect on the end user experience. App stores/platforms will prosper but as with the on-deck experience of the past, bury a wealth of innovation deep in the catalog and fragment what consumers really do often. Apple has done a nice job to not shove the OS in your face like Microsoft, but consumers still will have very different experiences across apps. For prosumers that is OK, but we will have to see how mainstream consumers (typical feature phone users) use these more open/smart devices. Carriers have a vested interest to ensure the best usability (avoid churn, cust support, drive usage, etc). This means they are inclined to maintain certain use paradigms for lifeline (voice, VM, SMS, MMS) and emerging operations (social media, search). I am a proponent of tiered data pricing along the lines of a CDN and think there is case for a mobile CDN model.
John 0 0 -
John,
I actually think we’ll see greater and greater smartphone adoption by individuals. The mobile Internet is here! That said, my concern is more about how App Stores will impact the way companies push applications to their workforce, and when appropriate, prevent them from downloading other applications. This is the next challenge in my mind.
Philippe 0 0 -
MOBILE CARRIERS AND IP
Great post and I agree that carriers need to find ways to be “smarter dumb pipes”. When I read Christensen’s “Innovator’s Dilemma” I recall something about a company finding it difficult to get outside it’s ecosystem of customers and capabilities. Carriers have that problem – they are good at managing spectrum, hardware infrastructure and distribution (.. even if they actually outsource some of these as Bharti Airtel has done). I met someone in the mobile messaging software space who told me that carriers’ attempts at developing their own software applications have been futile and/or substandard. It seems to me that carriers do well at the capital intensive tasks and not well at the intellectual-property intensive initiatives. 0 0 -
Hence why they are spending more time working with companies that provide mobile application middleware platforms.
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David Oliver
This is a pretty thoughtful article, but I don’t really see why a blog interested in “Enterprise Mobility Matters” has an opinion about application marketplaces. If an app is going to qualify as an “enterprise app”, that app is not going to be distributed through an app store – it’s going to come right from the enterprise itself. App stores are, in my view, a consumer phenomenon.
Verizon. What’s not said here is that it’s not so much about Verizon per se as their long time technology partner, QualComm, who have pushed well outside their space as wireless technology provider into software toolkits, content partnerships and application sales and validation *well* before Apple did it. IMHO the reason you are not seeing high value devices on Verizon is that no one wants to pay the “QualComm tax”.
New numbers are out for the Apple iTunes App Store: 85,000 apps and they reached 2B downloads in half the time it took them to reach 1B. Astonishing curve, folks. 0 0 -
Thanks for the feedback on the article. It’s actually highly relevant to enterprise mobility IMHO. Smartphone platforms such as webOS are obviously foundational to mobility. The consumerization of these devices permeates through to enterprise mobility and while App Stores may be more consumer oriented, you will absolutely find enterprise apps on them. The App Store phenomenon does hence create a potential conflict of interest.
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You can find lots of business apps on app stores, especially CRM, sales, tracking related apps. They’ll all end up on everyone’s app store just because it’s a way to find them vs. rooting through tons of websites. The same convenience and ease of use consumers look for business users need, too.
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John Long
App Stores exist solely due to the shortcomings of the handset maker, the carrier, and their developers. This is both intentional and unintentional: there are unmet needs which outpace the ability of the carrier to provide solutions – they are not experts in GPS, personal accounting, photo services, widgets or weather reports.
The exercise of control over an App Store is leading Verizon to a corner where they won’t have any handsets to approve. The handset makers realized their limitation and lack of desire to continually develop software – hence, the App Stores. The carriers are not in denial, either. This is a topic of board room discussions. The issue is how the carrier cements its position for the future. Cable companies made a move – they have attempted to popularize their on-demand platforms.
Handset makers, on the other hand, get the immediate benefit of an App Store, and it takes away a lot of time-consuming software development. Verizon may not realize immediate benefits, but when they realize the mounting costs of maintaining a proprietary OS, they will come around. The question with Verizon is how much longer can they sit still? “Get it Now” is pretty far down the reporting list after churn, ARPU, and increased efficiency. It is lumped in with texting and MMS. They have not moved one way or the other, and market share has come by acquisition. There is not much left to buy, and Sprint is obviously not a quality target for Verizon.
For Verizon or Cable companies, there is a squeeze on the other side as well — with network equipment outsourced, carriers are also at the mercy of software and hardware vendors to expand the range of available features. They have a legitimate reason to fear becoming a dumb pipe: if they cannot dictate, control, or anticipate what network features they want, and App Stores take away control of the traffic, all that’s left is to keep some accountants around to depreciate the equipment they are buying and some union members to keep it operating in spec.
Verizon is a great example of a company that stopped innovating and got distracted by its own hemorrhaging. Buy, heck, even one-trick-pony Google can’t monetize anything other than ads. 0 0 -
John,
You raise some interesting points, but I maintain my premise…what’s wrong with just being the pipe? The MNOs can compete on quality of service and care. The only reason I am not currently on VZW is because they are CDMA – once they start having nifty LTE handsets, I’ll be switching over to them. Why? Because they have the best pipe. Now they can also do something else which is take a cut of the app store revenue.
Let’s be clear, as much clout as Apple has, so does VZW. There’s also been a lot of press recently on how AT&T’s subsidies to Apple are making AT&T only recover their costs on month 17 of the 24 month contract. That’s not a good bargaining chip for Apple and their App Store. 0 0 -
I agree, and they are doing the best they can to compete on quality. Their international wireless service is the best, IMO.
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Carrier Marginalization Part II: Verizon Wireless vs. App Stores
When the story first broke on Friday, I was working through my thoughts as to why (if true) this was a bad move on Verizon’s part. The cynic in me also thought it could have been investor manipulation of Palm’s stock to get a very short term arbitrage or short selling opportunity. From the CNet article:
Don’t you just love Wall Street?
So let me share with you some thoughts as to why I don’t believe the rumor. If you believe that Verizon was going to snub the Pre, most likely because of its App Catalog’s potential threat to VCast, then you would almost be sure that Verizon would not support any device from Apple given its dominant position with its App Store. That would also mean that Verizon wouldn’t want to support any device that had its own application marketplace. So no more Windows Mobile devices, no Android devices, no Nokia. Verizon would certainly keep BlackBerry given the huge installed based on professionals, but that would be an interesting set of negotiations….to say the least.
The point is, Apple has once again changed the game for carriers. The App Store/Catalog/Marketplace/World/Whatever you want to call it is now a great way for consumers to derive new value from their mobile devices. This will drive further adoption of data plans, which you would think carriers would welcome (unless your AT&T these days). My point is, I don’t think there’s much the carriers can do at this point with regards to application stores. They may very well be cut out of this increasingly lucrative segment of the market. They may in fact be marginalized even more than before.
I think that’s OK. I’ve said this before and I’ll say it again. The carriers should stop fighting to be more than a dumb pipe. The cable service providers recognized that a while back, and they are doing well. The wireless carriers should instead find ways to be smarter at being a dumb pipe. As opposed to having exclusive deals on devices, they should try to have exclusive deals on content like how Sprint does NASCAR (not that I have ever watched NASCAR). They should also have tiered pricing for data plans….not on amount of data like they do today, but the speed at which you are connected. If you have slower bandwidth, by definition, you’ll use less traffic – that’s a win win for the carriers.
So stop fighting the App Stores. Worry less about exclusive deals with handset manufacturers and focus instead on delivering choice and value to your customers – regardless of whether they are consumer or corporate users. And Verizon Wireless, listen to your own words (as per the image at the top of this entry)
Happy Sunday everyone – Go Pats!