Tuesday, July 20, 2010

App Store Strategy - Closed Wall Garden Approach

A couple of years back, many telcos tried the "Wall Garden" approach whereby the telcos have their own branded "portal" or "website" that gave their subscribers the ability to access and download contents such as music, ringtones, wallpapers etc. i-Mode is a typical success story. However, it seems this approach cannot be successfully duplicated in other countries. Why?

  1. The phones (unlike today's smartphones) are not ready to download contents like music and applications. They are "meant" to download simple contents such as ringtones and wallpapers which are easy to be duplicated elsewhere. The subscribers can easily cut .mp3 files to be ringtones and also create their own wallpapers using free Utilities.
  2. Most portals are being created by major phone manufacturers themselves like Nokia. There are attempts by various music portals to be offered as part of the telcos wall garden portals. These various content providers makes the handling of telco portal a nightmare. The telcos are not in a good positioned to become a content aggregator.
So, how different is today's Mobile Portal? Apple has introduced iTunes Store for many years (since 2003 and later launch App Store in 2008) and their first customers are on fixed Internet. Initially focused on entertainment contents, they have now moved to application contents. When Apple introduced the iPhone in 2007, the whole mobile Internet landscape have immediately changed. Why?

  1. Apple have Millions of loyal customers before they launch their 1st smartphone i.e. iPhone and the App Store. They are PC, Mac, iPod and iPod Touch users. All of them require iTunes to sync the music, video and the apps.
  2. Even though they have iPhone users, there are still a big percentage of the customer base are using iPod Touch to access the Net. Most of the iPod Touch users are young ones who cannot afford to pay high mobile data charges.
  3. Once the young users become a working adult, they are now able to buy a higher end device such as smartphone and also afford to pay for the mobile data charges.
  4. Most of the Apps found in the App Store requires a connectivity to Internet.
  5. The commercial app is cheap - begins from USD 0.99. Thus, number of downloads is significantly high.
  6. Apple Store provides a consistent purchasing experience and maintain a single portal. Thus, a user felt safe to make a purchase knowing the license are well maintained at a centralized server maintained by Apple. In addition, the user themselves can change device or computer and yet don't have to make another purchase.



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