Branded mobile app stores by both device OEMs and carriers have existed in India for a while now, and continue to be launched.
Nokia launched its ‘Ovi store’ (later rebranded as ‘Nokia Store) in 2009, incumbent operator Bharti Airtel has its ‘App Central’, Aircel launched ‘PocketApps’ in 2010, and recently Idea launched ‘App Mall’ and Vodafone its ‘VStore’.
But these stores have failed to garner significant adoption primarily due to device fragmentation (India being predominantly a featurephone market), inconsistent experience and ineffective communication/marketing campaigns.
Smartphones nullify the issue of fragmentation and provide a stable and consistent experience (in the form of standardized operating system, faster processors, large memory, etc) for app downloads and usage. The proliferation of smartphones has only recently begun in India. While smartphones formed about 7% of total mobile device sales in 2011, they are expected to grow to about 15% in 2012 and continue growing in the coming years.
This smartphone growth in India in the recent years has been be primarily driven by wider acceptance by Indian consumers and the devices coming down the price curve. In 2012, share of Android OS is expected to continue its recent growth momentum and be the dominant platform, based on multiple devices being launched by both domestic and global OEMs, across all price points.
But competition among various Android-based device OEMs is also increasing. Currently, about 125 Android-based smartphones by over 17 OEMs are available in India or have been announced. Most of these devices are developed using the default Android user interface and comprise the Google Play app store (formerly ‘Android Market’), which leads to lack of differentiation among devices of various brands. This commoditization and lack of differentiation among various device models is a cause of concern, especially for OEMs. Increased competition is leading to a shrinking upgrade cycle and increased churn - the average smartphone upgrade cycle in India fell by 30% between 2009 and 2011, and is expected to decline further.
One way of overcoming the issue of commoditization and lack of differentiation, and potentially increasing consumer engagement and brand loyalty is launching customized, branded app stores. Apps are an integral pat of the smartphone ecosystem. Many services such as multimedia (music & video) consumption, gaming, reading, location-based services, web browsing, email access, social networking, etc., which were accessed using multiple devices and platforms are being increasingly done using a smartphone. And, apps are playing a key role in enabling this convergence.
Globally, various OS players offer app stores with hundreds of thousands of apps.
However, the key issues with most global app stores are of discoverability and lack of regional apps. Also, there is little or no provision for device OEMs and carriers to extend their brand across these app stores and engage the consumer, as these players have no access to consumers’ apps purchase & usage behavior and other analytics.
Customized, branded app stores offer a lot of flexibility for OEMs/carriers. If implemented correctly and with a definitive purpose, a branded app store could be a powerful tool for OEMs/carriers. Along with being an extended brand promotion and consumer engagement tool, it can be a potential differentiator, increase device/service sales and revenues, help understand consumer usage behavior (thus, enabling user profiling and targeting), provide a platform to cross-sell and upsell products/services and act as a retention tool (potentially reducing churn).
A branded and curated app store will tackle the issue of discoverability for the consumer and also allow the OEM/carrier to promote a specific set of apps/content aligned with their brand promotional activities. In India, branded app stores are developed and offered as per OEM’s/carrier’s requirements either as one-time implementation or a managed/hosted service by niche OTT technology providers (such as Borqs, a niche Android solutions provider).
A few device OEMs and carriers operating in India identify this opportunity and are preparing to offer customized app stores for their smartphones:
-Samsung already has ‘Samsung App Store’, co-existing with Google Play Store and the Samsung, India team drives market specific apps and content
-India contributes to over 60% of downloads (in all APAC markets) for a global Android-based smartphone OEM
- CDMA-only carrier MTS has launched “Planet App”, an app store with specific set of apps and content for Android-based devices on its network
- A leading dual-technology carrier is soon expected to launch an app store (with user-defined window for curated apps) for smartphones on its network
- Vodafone India is revising its revenue-share arrangements in favor of app developers and content providers/aggregators to encourage increased app/content development targeted for Indian market
These are encouraging steps by key industry players. But to be successful with their app store strategy in India, the players have to overcome many challenges such as consumer and retail channel education, distribution channel selection (pre-burnt, SMS/WAP based installation, STK, OTA download, etc), unproven monetization models, increasing competition and potential commoditization.
We believe that the key ingredients for a successful app store in India are relevant apps and content, a simple and consistent user interface, a mutually beneficial (for provider and consumer) monetization model and an effective marketing campaign.
Starting as a differentiator, potentially driving device/service sales, branded app stores could soon become hygiene in the Indian market. Now is the time for mobile device OEMs and carriers to start thinking on custom, branded mobile app store strategy. Convergence Catalyst believes that if exploited smartly a curated, branded app store can successfully deliver on key brand promises for a player at a regional level.
Jayanth Kolla is co-founder and partner at Convergence Catalyst. For more information visit www.convergencecatalyst.com/