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Microsoft, Nokia Add Phone App Stores

Barcelona, Spain— Taking a cue from the success of the Apple App Store, Microsoft, and Nokia launched their own online app stores that permit over-the-air downloads of applications to mobile phones, during Mobile World Congress here last week.

In addition, Google expanded its app store last week to include paid content where previously it offered only free software.

The trend is significant because it is transforming cellphones to personalized mini PCs that can make use of thousands of applications, many of which are free. These app stores also foster a direct relationship between phone/OS makers and their customers, reducing the role of the carrier.

Last week, Microsoft announced its app store called Windows Marketplace will launch during the second half  and Nokia announced the Ovi Store will open for business in May.

Consumers downloaded more than 500 million applications from Apple’s App Store in its first six months, a success that other phone makers are trying to replicate, but not because the app stores are a cash cow in and of themselves.

Only 15 percent of Apple’s apps are fee-based and many sell for 99 cents. Google is funneling all of its app payments back to the developers while Apple splits it 70/30 in favor of Apple, said analysts. But the app stores help sell phones and they allow the phone or OS supplier to set up a billing platform with the customer that might be used in other ways, analysts said.

Principal analyst Julie Ask of Forrester Research noted, “Once device makers have a relationship with the consumer it can go beyond the cellphone. Apple is selling movies to people in their living room and music for the iPod, all through a single billing relationship through iTunes. Previously consumers were billed only by the carrier.

Microsoft’s Windows Marketplace will let users browse and purchase applications from a new spate of Windows Mobile 6.5-based smartphones due for release later this year from companies including HTC. More than 20,000 apps for Windows Mobile phones, now renamed “Windows phones”, may be placed in the new Marketplace, at the choosing of the developers, said Microsoft.

Nokia’s Ovi Store will allow games, videos, widgets, podcasts, location-based applications and other apps to be downloaded to Nokia Series 40 and S60 phones, owned by tens of millions users worldwide. The possible user base for Ovi, should grow to 300 million devices by 2012, said Nokia.

Developers will be able to start uploading content to the Ovi Store this month. Nokia claims its online store gives the added benefit of tailoring content to the user based on his location or information from his social networking contacts. Users will be able to pay for content either by credit card or through operator billing.

Google’s Android Market is now offering fee-based products such as Quickoffice for $7.99 through Google Checkout.

Analysts note that cellphone applications have been sold for years through the carriers but the purchasing experience wasn’t user friendly and the applications were expensive. “Apple changed that and now other platform providers seek to emulate the experience, said analyst Charles Golvin, also of Forrester Research.

But emulating Apple has never been easy. “Nokia suffers from an uninspiring user interface on the device (probably the same as it was 5 years ago)… Microsoft has more of a chance here since they have existing MSN users. But they also suffer from a user interface that looks old compared to competitors like Apple,” said Gartner VP Ken Dulaney.

Also at Mobile World Congress, Microsoft added a My Phone feature to Windows Mobile 6.5 based phones that lets users back up their phones to the web with automatic syncing, so text messages, photos, video, contacts and appointments can be edited on the web and then downloaded to any number of devices. The feature carries no extra fee and is expected to prove useful as 12 million phones are lost each year. Also 77 percent of photos stored on a phone, never leave the phone, said Microsoft.

HTC will deliver two of the first phones running Windows Mobile 6.5 including the Touch Pro2 slated for the U.S. this summer and the Touch Diamond2 due for the U.S. later this year. They feature Push Internet and new single contact views that show the full history of communication with a contact, whether that is voice, text or email. They also have improved TouchFLO 3D touch sensitive screens and a Straight Talk feature that combines voice, email and speakerphone modes so users can toggle from email to multi-party conference calls.

Samsung also introduced in Barcelona a new Memoir full touch-screen, camera phone with 8-megapixel capability. It will be available exclusively through T-Mobile beginning Feb. 25 for $249 with a two-year service agreement, $50 mail-in rebate and a qualifying data plan, said Samsung.

The Memoir offers a Xenon flash, 16x digital zoom and the ability to record up to 60 minutes of video. It also has a full HTML Web browser capable of high-speed data on T-Mobile’s 3G network.