Tuesday, May 12, 2009

Carrier app stores still alive and growing

The assumption was that the iPhone App Store harkened a tidal shift to phone (or operating system) centric app stores. Many assumed that this also rendered obsolete attempts by mobile network operators to create their own walled gardens.

Apparently two of the four major European operators, Orange and Vodafone, didn’t get the message. The Orange Application Shop (announced last month) and the unnamed Vodafone application store (announced Tuesday) are two examples. (Apparently the Vodafone store will also apply to Verizon Wireless in the US.) Both T-Mobile and Telefonica also have app store experiments.

Each of the app stores has its own APIs, own billing systems, own markets. Of course, this is in addition to the app stores from Apple, Google, Microsoft, Nokia, RIM, Samsung and others — each with its own APIs, devices, billing and so on.

The proliferation of app stores reminds me a lot of music stores: Apple created the iTunes Music Store and everyone wanted to have their own store. Now many of them are gone.

However, there’s actually a better argument for multiple music stores than multiple app stores. Once upon a time, we had thousands of LP (later CD) stores. If the online music stores were all distributing DRM-free MP3 files, then consumers could buy songs from different stores and different days and have them all work together.

However, a fragmentation of MP3 distribution would increase buyer power and thus increase competition (and price competition) between suppliers. This competition could commoditize MP3 distribution — putting the less efficient dealers out of business — or put pressure on music publishers to increase promotions or cut prices.

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