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By | Bill Ray 27th February 2009 09:02

World+dog has online app store

But what's in it for me?

These days every company has its own mobile application store - Nokia, Microsoft and Samsung have announced new stores in the last week or two - but what are punters actually looking for in an online store, and what's in it for the mobile developers?

Desktop software made the transition to electronic delivery pretty quickly, though content aggregators did exist for a while and some are still around: Tucows and Download.com leap to mind. These aggregators provide billing, promotion and (increasingly) peer-reviews of applications in the same way as the latest generation of mobile app stores, but most of us are buying our desktop software directly from the publishers - a trend that could scupper application stores as an revenue stream if repeated in mobile.

It is possible to prevent punters going direct to publishers - technically restricting the platform to a branded application store is what Apple is doing, and what Palm has in mind for the Pre. But the majority of smartphone users have an increasing range of application stores available to them and may find themselves grateful for that choice.

Some History

Mobile-application distribution used to be a happy duopoly between Motricity and Handango, with the latter being the majority partner. Revenue was split three ways, between the network operator, the application store and the developer - so developers got to keep between 30 and 40 per cent of the sale price.

But Apple changed all that, primarily by cutting the network operator out of the loop and passing the additional cut on to the developer. Android Marketplace works in much the same way, only the operators retain their cut and the store passes the remaining revenue to the developer - so the Android Marketplace makes no money at all, though there are other options as we shall see.

30/70, as established by Apple, seems to be settling down an industry-standard revenue, with the application store taking the smaller share to cover running costs. However, developers expecting to take home 70 per cent of the total sales are forgetting that promotion won't come cheap either.

The scum also rises

Mobile development has got an awful lot easier since Wrox published its first book on Symbian programming (littered with errors and outdated at publication, it occupies a special place in the minds of mobile developers). The Palm Pre will be entirely programmed in ECMAScript (extended to provide access to native functionality) - allowing every script kiddie and HTML "programmer" to churn out farting applications in the hope of making millions.

The OMTP's BONDI initiative is also gaining widespread industry support, bringing ECMAScript apps to a load of mobile platforms over the next year or two.

Looking at iTunes as the model other stores are trying to emulate - The most successful way to sell an applications is to be listed in the top 25 apps, which (according to Pinch Media) means shifting 20,000 copies of a free app in a 24-hour period, or 5,000 to get in the top hundred - but even the latter will lead to sales more than doubling (2.3 times, according to Pinch).

When users were swamped by PC apps they turned to magazines to help them wade through the crap, and it seems that blog writeups are fulfilling a similar role. The real goldmine, though, is to get listed as a Staff Pick or similar; this is something shoppers tend to assume is an unpartisan recommendation, which seems to be true, for the moment at least.

That could well change, following examples recently reported by Private Eye: Amazon, in helping punters pick out a good read from a similarly-sized mountain of options, will helpfully recommend a "Deal of the Week" while charging the publisher £3,000 for the privilege of being listed thus. In the physical world things are more blatant: WHSmith will tap a publisher for £25,000 to be "Book of the Week", or £10,000 for the deeply ironic "Great Price" tag.

Such tricks aren't yet evident in the mobile apps business, but with Google making no money at all selling software it's impossible to believe such services won't be available soon. While one hopes that such partisan arrangements will be swiftly identified and outed by the internet community, that hasn't happened to Amazon, WHSmith or Waterstones.

Nokia's Ovi store will, apparently, work out what we want to buy from our location and what our mates are buying. It's an interesting idea, though it's hard to believe that's actually going to help much when there are tens of thousands of applications to pick from - better to have someone else do the filtering for you.

Cutting the crap

Another brand to launch in Europe in the last few weeks was HandMark, peddling an on-device application that provides both free and paid content as well as an application store. HandMark reckons it can differentiate itself by providing proper support for applications, and applying strict quality control to what gets listed.

So confident is HandMark that it is keeping to the industry-standard 30/70 revenue split, believing that the increased sales resulting from providing a quality service will fund the support and filtering costs. HandMark is also pleased with the on-device nature of its store, though that's less of a differentiator than it used to be.

Network operators have tried this before: O2 long emphasised the quality of the applications offered on the portal, rather than the quantity, but these days punters are more likely to be looking for a specific application and will go elsewhere if they can't find it.

This presents an interesting problem for the monopolistic providers, Apple and Palm: as the only source of applications for their respective platforms they will inevitably have to provide a huge range of applications, forcing customers to sift through mountains of rubbish to get to the content they are interested in.

On iTunes this has resulted in a morass of low-standard apps being sold for a couple of dollars to punters who are so enamoured by the novelty that they don't care. One can only imagine that Palm's rapid development environment will only make things worse in that regard.

Can the ecosystem survive?

Back in the early days of the internet there were hundreds of small applications that users could download from Tucows and its brethren for a few quid, many of which were essential to productive use of a computer. But as those features got increasingly folded into the operating system, became features of other applications or released as freeware, the small-scale publishers have been pushed into niche markets and the lone developers increasingly recruited by larger concerns.

If the desktop software market is indeed a suitable model for mobile applications - and there seems no obvious reason why it shouldn't be - then we can expect publishing brands to become increasingly important as punters become tired of searching through aggregators' expansive catalogues. That in turn means that the app store revenue stream has a distinctly limited life, at least for those who don't hold a technical monopoly on distribution. ®

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