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Telstra's Planned App Store Is a Shift for Carriers

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hdr_logo_whiteAustralian carrier Telstra says it will open a mobile application store much like Apple’s (s aapl) App Store, joining the frenzy surrounding such mobile app marketplaces (Microsoft (s MSFT), Research in Motion (s RIMM) and Nokia (s NOK) all have stores in the works as well). What’s noteworthy is that Telstra is a carrier, so its app store could become the mobile equivalent of a mall, bringing together various handset or OS-specific app stores under one “roof.”

Both IBM (s IBM) and Amdocs (s DOX) have launched software that would allow carriers to build their own sponsored app stores. Depending on the terms, this could be a change in policies at many carriers, which have in the past tried to govern application use on their networks and devices. In the process they’ve asked for such large chunks of the revenue and made the application approval process so difficult that most developers found some other way to get consumers to download their apps  — perhaps through their own sites or third-party marketplaces like Handango.

Gil Rosen, V-P of strategic initiatives and customer experience with Amdocs, says that carriers are changing their tune after seeing the success of the Apple App Store (and likely fearing the relegation to dumb pipe status). As a result, he thinks the carriers will snap up the opportunity to build their own stores (hopefully on the Amdoc platform).

“We’re providing a chance for the service provider to recapture their place in the value chain, and allowing them to engage customers directly and use other players in the market as secondary service providers,” Rosen says.

Rosen thinks carriers are willing to share the revenue a bit more freely than in the past, but emphasizes that carriers also bring a direct relationship with customers to the app store. If a customer stops using an app, the carrier could solicit feedback or help the developer figure out why. Given how few applications get used, perhaps that does add enough value to cut the carrier in on any revenue share agreement. However, I imagine many users would resent it if, after downloading iFart and then deleting it, the developer sent them an inquiry through the carrier wondering if the user had hated the application or simply decided to grow up.

18 Responses to “Telstra's Planned App Store Is a Shift for Carriers”

  1. shareholder

    Two things you can be sure of; Telstra’s store will be the same mish-mash of conflicting agenda that their other net enterprises are and that the success of the venture will be limited by the repulsion this generates in their customers.

  2. A real benefit that carriers _could_ provide, and what developers might pay for, is improved discovery. We’ll see how well they do.

    We took a different approach at Everypoint ( Our development platform simplifies building apps for the much larger feature phone market and addresses discovery by providing an OTA-able app catalog on the device.

  3. Stacey Higginbotham

    Anonymous, those are the exact questions I have for the carrier app store model. Some developers feel the publicity and notice they get from being in the Apple App store is worth the rev share. It’s kind of like a consumer good company paying to be placed on an end-cap at a grocery store. But clearly if you’re going to take people up on the offer it has to be priced correctly — and a developer can’t pay 30 percent to each party he or she is working with. I don’t know who should control the app stores in the end — carriers, device makers or OS-companies — but it’s a fight that we should see playing out in the coming year.

  4. Anonymous

    Apple App Store is a different story as iPhone Apps can’t be sold outside.

    Being a symbian developer I do not understand why should I share hefty 40% revenue with Nokia App Store and same story apply to others but iPhone App Store. Using Paypal I need to share 3.4% transaction charges + approx 5 % currency conversion if buyer is in different countries (obvious the case for global market). Still not more than 10 %.

    By setting up a simple website why shouldn’t I pass this benifit to my customer? just becuase they have a system where they can list recent app on top or most attractive app on top etc? I ask consumers if they would like to pay 40% extra just because of that or a developer should pass this benifit to consumers.

    Carriers has a billing system so I would be happy to go with them if they charge me less than 10%, basically earn what paypal is earning; however with carrier I can not target the global market so why should go with carrier either.

    Can someone please educate me?

  5. hi,

    I was would a operator app store be any different from what happens currently happens on an operator data portal i.e 1)Developer makes app sells it/ has a rev share deal with an aggregator. 2) Aggregator ( signed up with the operator) showcases the app to the operator.. 3) If the operator is interested. it will place the app “ondeck”…4) customers are charged for the app..5) Revenue is shared amongst the operator, aggregator (developer)

  6. I agree with Zip. I think that they’re just leveraging the media hype behind APPL’s effort. Sure they will update and improve on what they already do; but you’d expect this anyway. This is more about marketing than anything else.

  7. Stacey Higginbotham

    zip, The details on telstra’s actual store aren’t disclosed, but the general idea is the developers would work with carriers directly and go through the carrier for a one-to-one relationship with the subscriber. The approval process would be up to the carrier and the rev share would be between the carrier, the developer and perhaps a secondary OS or device centric store if the developer wanted their app there as well. Rosen says he expects one major U.S. carrier to launch a carrier store this year, but says a lot of these details are being worked out. I can see the benefits to the carriers, but am rather skeptical about the benefits for the developers.

  8. I don’t understand how the app store is different than the current carrier setup? Won’t apps for the store still require Telstra’s approval? Won’t Telstra still take a cut of the revenue?

    Are we talking about a less stringent approval process and friendlier rev share? Help me out…