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App store is not the mobile future, says Google, but cellcos disagree

The application store has certainly been the highlight of the key mobile players' strategies this year, but Google claims stores do not represent the future of the industry. Despite its work on Android Market, most consumers will turn to the browser for their content and information requirements, said VP of engineering Vic Gundotra, speaking at the Mobilebeat conference in San Francisco. This will be bad news for cellcos if Google proves right in the medium to long term - much of their bid to avoid becoming mere bitpipes relies on creating heavily branded portals, widgets and stores, adding up to a user experience that is more attractive to users than those offered by handset or software vendors. They will rely on their brand power; on advanced software initiatives (often collaborating to provide larger combined user bases for developers); and on offering superior quality of service, billing and targeted services, by pushing customers' activities through an IMS-based core, rather than having them roam, free and unmonitored, around the web.

The application store has certainly been the highlight of the key mobile players’ strategies this year, but Google claims stores do not represent the future of the industry. Despite its work on Android Market, most consumers will turn to the browser for their content and information requirements, said VP of engineering Vic Gundotra, speaking at the Mobilebeat conference in San Francisco. This will be bad news for cellcos if Google proves right in the medium to long term – much of their bid to avoid becoming mere bitpipes relies on creating heavily branded portals, widgets and stores, adding up to a user experience that is more attractive to users than those offered by handset or software vendors. They will rely on their brand power; on advanced software initiatives (often collaborating to provide larger combined user bases for developers); and on offering superior quality of service, billing and targeted services, by pushing customers’ activities through an IMS-based core, rather than having them roam, free and unmonitored, around the web.

Unfettered roaming may have problems of poor usability, patchy best effort performance, overloaded networks and apps that are not optimized for particular handsets, or for handsets at all. But it is what users expect, and they are increasingly able to cope with the pitfalls as they have done in the PC world, argues Google. Gundrota’s comments indicate another way in which Google is bifurcating its mobile internet strategy, between a platform for handsets that is tightly integrated with the device (Android), and a broader one for netbooks, smartbooks and similar products, that relies entirely on the browser and accessing content and apps in the cloud (Chrome OS). Like Intel, Google is talking up the continuing importance of the latter in usage of the web on the move – rather than assuming PC derivatives like the netbook will decline in the near or medium term in favor of new-style, fully mobile products with entirely new software and behaviour patterns.

Gundotra said no company, not even Google, is rich enough to support all the many mobile platforms in existence, and that will force most vendors, operators and users away from an app store model that will only get more fragmented. “What we clearly see happening is a move to incredibly powerful browsers,” he said. “Many, many applications can be delivered through the browser and what that does for our costs is stunning. We believe the web has won and over the next several years, the browser, for economic reasons almost, will become the platform that matters and certainly that’s where Google is investing.”

This is not stopping companies, including Google itself, from stepping up their store efforts. Microsoft will shortly open up its Windows Marketplace for Mobile shopfront, and a recent trademark filing suggests it could be planning to launch a second store, which would also cover other platforms like the Zune HD media player. Blogger Long Zheng, points out Engadget.com, has uncovered an application for the ‘OneApp’ trademark, for “online retail store services facilitating the download of computer software for use on mobile phones, media players and other portable electronic devices”. Further details in the document suggest that the idea is to create a store covering all Microsoft powered devices, speculation that is given some weight by news that the Windows Mobile 7 team is collaborating with the Zune unit (perhaps on the much anticipated, but still mythical, Zune phone, perhaps on a unified software environment).

Meanwhile, T-Mobile has been one of the most thoughtful operators in seeking to create a new app store model that would differentiate a carrier shopfront from that of Apple, rather than emulate it. The US branch of the cellco is already working on its own cross-platform portal covering all the smartphones its carries, and even integrating with Wi-Fi, and now it is looking to distinguish itself by signing up exclusive programs, rather than by boasting of huge numbers of apps.

T-Mobile USA’s early support for Android should help in this respect, allowing it to ride the current wave of enthusiasm about the open source OS, and the first example is its collaboration with geobrowser maker Geodelic. The smaller firm has designed an app
specifically for T-Mobile’s next Android device, the HTC MyTouch3 (Magic). MyTouch3 will be heavily marketed on the basis of personalization, and rather than preloading a wide range of apps (mainly Google’s) as in the T-Mobile/HTC G1, this time the cellco will offer its own AppPack – highlighting rather than preloading some distinctive programs, many of them exclusive to T-Mobile. These include GreenPerks, myFaves, myAccount and Visual Voicemail – and Geodelic’s Sherpa.

Sherpa is a location-based app to integrate a consumers’ relevant information based on location, context and personal interests. T-Mobile describes it as its ‘Hero app’ (though ironically, it has not taken on board the latest HTC Android phone, actually called Hero, and looking more advanced in personalization terms than the Magic-based MyTouch3).
Geodelic has tightly integrated Sherpa into the MyTouch handset to reinforce the phone’s personalization credentials. The app becomes more and more customized to the user over time, said the vendor.

Earlier this year, T-Mobile made its views on app stores clear when CTO Cole Brodman told a conference that, despite the cellco’s fervent support for Android, the platform was not yet fully in tune with carrier business models or consumer needs. In particular, it needed to have more filters so that customers could get tailored and personalized selections, and find these easily (a key promise for Nokia’s Ovi Store, and an indicator of this store’s threat to Google – Nokia understands cellcos like nobody else). “Users have a hard time searching through that long tail,” he said.

Developing hero apps for MyTouch is just one part of T-Mobile’s mobile devices plan, centered on driving data consumption, according to Craig Moffett, senior analyst at Bernstein Research. In a research note, he wrote: “T-Mobile USA told us that they have essentially a two-pronged device strategy to increase data usage. The first part of the plan appears to be to broaden the range of devices they are offering in a nod to the limitations of the appeal of the current range and also as part of a drive to get more data-using devices into the hands of their customers to drive data ARPU. This drive does not, however, extend to pursuing any of the big-noise phones that seem destined to attract high usage technophiles or to turn normal customers on to serious data usage. The second part of the plan is to potentially introduce innovative pricing plans and device leasing plans in order to get more data devices into more hands.”

The operator is pushing even further down the personalization route with a major upgrade of the role of its MyFaves offering. It aims to turn this into a fully fledged social platform. T-Mobile was one of the first major cellcos to recognize the power of mobile social networking in attracting users and encouraging them to make heavy use of its services. It has made some strong moves, including the creation of a portal that allows unified access to many social nets, and now the US arm aims to turn one of its most popular offerings, MyFaves, into a fully fledged social platform.

MyFaves is basically a plan that allows unlimited calls and texts to five favorite numbers, but its user interface has always held the potential to expand its functionality into something more distinctive. T-Mobile is also bringing it to Europe after a successful period in the US. The most visually obvious aspect of MyFaves is that it allows users to see the photo or icon displays of five chosen friends or family numbers on the display of their handsets. This gives T-Mobile strong visual differentiation for what is, at base, a friends and family tariff, and it has always been clear that it was a first step to a full icon-based web interface, of the kind users increasingly demand, and towards an experience optimized for social networking. One of the cellcos’ key aims is to create such experiences with their own brands rather than being submerged by those of Apple or Nokia.

MyFaves has elements that clearly tap into the mobile Web 2.0 and social networking trends, and T-Mobile USA seems to think the moment is right to leverage these. “I want it to be more than just voice,” Brodman told GigaOM. “I want it to be a lens to our social networks.” The social makeover will be complete this year and marketed aggressively from early next year, aiming to drive customer loyalty and data revenues, as the cellco’s 3G network falls into place.

The other US carrier with a similar asset waiting to be exploited is Verizon Wireless, via its acquisition of Alltel – whose My Circle offering has a similarly advanced user interface, created using Qualcomm’s UIQ, and is part of a new set of plans that the CDMA giant will roll out in the coming months. Alltel recognized even earlier than T-Mobile that an advanced and personalized user interface would be a key to keeping the operator in the forefront of the user’s mind in the open web world. Early in 2007 it announced a new UI, which – like MyFaves – integrated with friends and family tariffs like My Circle, but clearly had the potential to evolve into something more strategic. This was CellTop, a patent pending technology based on UIone (also used by O2).

CellTop was designed to improve discovery of content and give subscribers better access to, and management of, mobile web and media, as well as, in time, giving them a far more customizable experience. It is based on a collection of modular ‘cells’ that act as short cuts to mobile applications like weather updates and text messaging. The cells are laid out in two vertical columns per screen, with a maximum of 10 cells. The user launches the UI with one click, then navigates with a series of side-to-side clicks and avoids excessive vertical scrolling (remember all this came before the launch of the iPhone or LG S-Class).

Whatever Verizon does with Alltel’s neglected gem of a user interface, the lessons of more intuitive access (driving increased usage and loyalty) and of homescreen icons, even pre-touchscreen, have been widely learned. Indeed, Verizon Wireless is a partner in the most far reaching operator initiative to seize the upper hand in the mobile web – the Joint Innovation Lab (JIL), set up with Vodafone, China Mobile and Softbank to create a widgets-based UI platform with an addressable user base for developers of over a billion, and – they hope- an experience that will outdo those delivered by the smartphone makers.

China Mobile should show off its implementation of JIL when it unveils new handset UIs and its app store soon, and Vodafone is gearing up for a major revamp of its mobile web portals, also relying heavily on JIL. As a first step, it is to dump its once all-important Live! brand in favor of a new portal structure and brand – the unoriginally named My Web.

Vodafone Live! was a ground breaker in its time, making the cellco the first major outside the Far East to recognize that it needed to associate itself with a software experience and web portal. But its operator-centric approach still clung to the walled garden, and has become old-fashioned in the world of app stores and open web services. Now My Web promises to support all the features that the modern consumer supposedly wants, such as personalization and integration of social networking and messaging.

This is part of a far broader push to make Vodafone a serious mobile web services player – it has opened up key telecoms APIs to developers, to increase the attraction of its forthcoming apps store, and aims to leverage JIL to create a distinctive user experience for its users and a huge addressable market for its developers. The first visible steps include the unveiling of the widget oriented Vodafone Homescreen US, and the initial release of Vodafone Apps Shop, which focuses on highly recognizable content partners such as BBC Sports and Time Out. The UK is the launch market and Vodafone aims to have 1,000 apps by October.

The operator has spent about €150m promoting Live! since it was launched in 2002 across Europe, according to New Media Age. My Web will be rolled out through the summer in 11 countries and will gradually be expanded outside Europe too, to some emerging markets where mobile web services are set to explode. Simon Ryder, marketing planning manager at Vodafone, told NMA: “We’ve proven via Vodafone Live that people love our services. It’s about making them easier to use. Our subscribers say Live! is great but it would be better if they were able to personalize it more.”

There is also a race on between vendors that hope to provide frameworks to help operators deploy app stores more cheaply and easily, strengthening their hands, in terms of time to market, cost and ROI, against Apple, Android Market, Ovi Store and the other vendor offerings.

Symbian could take a similar role with its forthcoming app store framework, Horizon – even if that might create some conflicts of interest with Ovi Store from its largest user, Nokia, it could also serve to broaden the software platform’s sphere of influence to span supporting phonemakers at the same time as making it more attractive to cellcos. AT&T is already said to be working hard with Symbian and considering it as the primary foundation for its next generation webphone and portal strategies.

Symbian has not planned a single branded store like Android Market, leaving that up to licensees such as Nokia, but it aims to provide the underlying frameworks to make it easier for Symbian-based vendors or operators to create innovative stores and content platforms. Making stores interoperable, and creating a common set of APIs so that developers can target a wide range of outlets, is an increasingly important goal, and the latest battleground in the fight to drive and shape the mobile web experience. Symbian’s bid will run into related moves by Ericsson, which wants to create a hosted app store template for carriers, and Qualcomm, with its Plaza online retail framework, based around the venerable Brew content distribution system. There is also the OneAPI initiative from the GSM Assocation, which opens up a set of common interfaces to allow apps to work more easily across different operator networks and shopfronts.

The first contribution from the Symbian Foundation is Horizon, an app publishing program that also supports marketing services and multiple language translation. It aims to help developers create and distribute mobile software to any Symbian-based handset or store. It will be free for developers to sign up (from October), and Horizon can also provide payment processing services, aggregating payments from across different markets and stores.

The current version of Symbian OS has 49.3% share of the smartphone market, according to Gartner, and features on 70 handsets in 26 countries, with Europe its heartland. Predictably, Symbian’s first customer for store-related services was Nokia with Ovi Store, and it is also working with Samsung on Application Store and – significantly, given AT&T’s recent shifts towards wide scale Symbian adoption – that operator’s Media Mall.

The Symbian Foundation’s Larry Berkin said greater consistency and simplicity would be essential if the store boom was not to be stifled. “Getting an application signed is a bit of a challenge for developers,” he said. “Getting through that process has been less than efficient.” He said a system more akin to that of the book market was required, with “technical, administrative and marketing support” for authors.