Since I had the Apple iPhone in my gadgets list I have to say that I have been very impressed by the AppStore.

It is definitely a quantum leap in application distribution.

iPhone AppStore

In the past we had only a few means to distribute applications on a mobile device:

• Pre install the application on the mobile device. This is something that only an handset manufacturer or an operator can do. Everybody in the industry knows that this a pain. You need to plan this kind of distribution with great advance and most of the time you end up pre installing a boostrap application that downloads and install the real application at the customer first use of the application itself. Moreover you will not get any money for this. The advantage of this method is that all of the customer base for that particular mobile phone will get the application but you do not have any guarantee they will use it.
• The other provisioning mechanism is sending a message (SMS/MMS) to the customer with a link which the customer may check in his browser and download the application from there. One of the major problems with this kind of distribution is the fact that the redemption is usually very low.
• In a similar way to the previous one you may put link to the application on your mobile portal and wait for customers to download and install it. Again, very low redemption.
• Several handsets manufacturer have tried to put on their devices an application catalog (e.g. Nokia) and this was one approach quite close to the one that Apple took with the AppStore. The point is that there was no business model attached to this or, at least, quite loosey-goosey. You install a trial application and then get an activation code from the web (mobile or fixed).
• For business customers and open operating system you may provision applications over the air using some sort of device management software but this will not definitely scale. At least for the masses.
• Finally you can shop for applications online (e.g. on sites like Handango) and the provision your mobile phone using your personal computer.

As you can see looking at these applications distributions models the operator is out of control for most of them. Operators do not really know what customers are going to install on their mobiles. The only perception they have is the data traffic that may be generated by some applications and by which they get money for.

Now let’s have a look at the mobile phone. If you install an application on a non open Operating System (e.g. Symbian, Windows Mobile, etc.) the application is probably a Java application that will be placed in a non organized list in the Java Application Launcher that in most cases is well hidden inside the mobile phone MMI.

You need to have a strong will to use that application since to launch it you will need at least three or four clicks.

Smarter phones will allow you to put your application in the upper levels of your menu structure making is easier to find and launch installed applications.

With the AppStore, and the iPhone, Apple has solved both of these issues:

• All applications are put at the main level of the MMI. Somehow we can say that all applications are created equal.
• There is a simple and unifed way to purchase and pay for applications. A user name and a password is all that you need.
• All applications are backed up on your personal computer making it easier to manage them.
• Developers have a unified Business Model to make money from their application. You get 70% of the application price and Apple gets 30%. As you can see from this model the operator is out of the game and has no control on this.
• Even if some criticism has emerged only approved applications will make their way through the AppStore. Yes, Apple has complete control on that but from a customer standpoint it is a guarantee that the application should comply with some quality and security standards.
• Users have the option to provide the developer with feedback and that feedback will be public and integrated with the AppStore itself. This is something I definitely like even if you will have alway to cope with personal opinions.

So it seems that Apple has done it right.

The question now is: is this approach usable on different mobile phones? Can low end mobile phone have the very same approach to application distribution?

My answer is yes, even if with some caveats:

• From a technical standpoint it is possible to move Java application out of the Java Application Launcher and place them anywhere in the mobile phone MMI.
• It is definitely possible to develop an application store with the same rewarding model for both developers and operators and mobile phone manufacturer.
• The main issue is that we may see a lot of different stores coming from differente companies leading to a fragmentation of the market. There will be no single point of reference for mobile applications and at the very same time you will not have a single, simple and efficient way to shop and pay for your applications.

Google is going to launch his own application store for Android. In this case the model is a little bit different from Apple. The developer will get 70% of the revenue while the operator will get 30%. In this particular case the operator will still be in the game.

Anyway the developer will have the option to distribute his application outside of the application store ecosystem implementing his own billing mechanism and so getting 100% of the revenue from his application.

From a customer perspective this is going to be a little bit more dangerous. Usually the iPhone is sold with flat data plan that allows to consume some bandwith on a per month basis. Customers do not really care about how much their application consumes in term of data transfer since they are on top of this flat data plan. This may greatly vary on all of the other customers.

There may be surprises for these customers.

I definitely think that Apple has signed a milestone in this area and I am sure that 2009 will see the rise of other application stores for mobile devices even if I think that Apple will still win hands down.

What will be the operator role in this is still to be seen.