Microsoft, Nokia Add Phone App Stores - Twice

Microsoft, Nokia Add Phone App Stores

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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.

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 into 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 (See story on p. 46.), 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 claimed 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 Quickbooks for $7.99, through Google Checkout.

Analysts noted 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.

For more details, including hardware introductions, see www.twice.com.

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