This whitepaper discusses how operators can successfully launch their own application stores. It identifies 7 key factors for a winning strategy: leveraging existing connectivity; integrating applications management, billing and CRM systems; providing a hassle-free billing mechanism; making the application store the focal point of access for value-added services; cultivating a fair ecosystem for developers; supporting multiple devices and operating systems; and offering location-based content. The whitepaper argues that operators are well-positioned to capitalize on application stores due to their existing assets and relationships with subscribers.

1. Application Stores:
How Operators Can Create a Winning Case
With the overwhelming success of application stores, this whitepaper provide
Operators insight on how to launch their very own application store to increase
ARPU.
It presents the strategy for Operators to embrace to succeed in the application
store arena and offer best-in-class experience to subscribers as well as
content developers.
WHITEPAPER

2. Application Stores: How Operators Can Create a Winning Case
Contents
Executive Summary 2
The Application Store Sensation 3
The Evolution of VAS 4
The Winning Application Store Strategy 7
Embark on the Application Store Journey Today! 11
References 12
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3. Application Stores: How Operators Can Create a Winning Case
Executive Summary
It is widely acknowledged that Apple has created a phenomenon with the overwhelming success of its App
Store. However, followers of this trend would know that the concept of application stores originated from the
need to offer value-added services (VAS) and has been in existence since the early days of dot-com bubble
in 1998. Since then the VAS industry has fast evolved due to changes in the delivery methods and the interest
shown by other stakeholders in the ecosystem. Today, VAS are commonly delivered through application
stores.
The application store is not a fad. Instead, industry experts forecast application stores to become a billion
dollar industry, with revenues expected to exceed $25 billion by 2014!
This worldwide phenomenon has drawn the interest of more device vendors such as Nokia and RIM as well
as platform owners like Symbian and Android to venture into their own version of application stores, while
Operators are expected to provide connectivity, as well as marketing and customer care.
Judging from how lucrative the application store has performed over the last 15 months (since the birth of
App Store in July 2008) and how small a piece of the revenue pie they received, Operators are looking at
adopting the model themselves to gain full control over their revenue and subscriber base.
Although Operators are willing to embrace this shift, the challenge remains in how can they do this
successfully, and in a way that provides meaningful differentiation in an increasingly competitive application
store market? The next big question is, how can Operators launch their own application store without having
to re-engineer existing processes/systems or straining resources?
This whitepaper discusses a cost effective strategy that will propel Operators in their mission of serving
contemporary and cutting-edge services. The strategy includes leveraging on existing strengths of the
Operator for a faster time-to-market.
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4. Application Stores: How Operators Can Create a Winning Case
The Application Store Sensation
Since its launch over 2 years ago, Apple’s App Store is rede ning the way users are using the Internet. In fact,
the application store sensation has been credited to jump-start the mobile internet trend, leaving Operators
around the world with steep surges in data consumption. Figure 1 below illustrates the tremendous
percentage of increase in mobile data in Q2 of 2009, across 3 regions.
Source: Alott Communications, Global Mobile Broadband Traffic Report, Q2/2009)
Quarterly growth in mobile data
40%
35%
GLOBAL MEAN
30%
25%
20%
15%
10%
5%
APAC 0%
EMEA
Americas
Figure 1: Quarterly Data Growth in Q2 2009
Decline in ARPU
While many would hope that the increase in data landscape has now shifted from a local and niche
traf c yields similar returns in ARPU, in reality, turf to the global arena, competing with device
worldwide ARPU has been on a steady decline. In manufacturers and application store owners.
other words, while Operators’ networks are being Operators need to realize that extending
used to download and access applications, they are connectivity alone cannot keep them a oat. Instead
not bene tting accordingly. If this pattern continues, they require software, device and service strategies
Operators may nd that slowly but surely, future that can add value and at the same time differentiate
pro tability will be threatened. Their competition them from competition.
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5. Application Stores: How Operators Can Create a Winning Case
The Evolution of VAS
Value-added service is not a new term in the industry and refers to a telecommunication company’s non-core
service; which means anything beyond the standard voice calls and fax transmissions that are largely used
to promote main businesses are considered as a value added service. These services may range from SMS
to Internet-based services like games and infotainment push services.
The concept of VAS began when (VAS) owners began to promote services via the World Wide Web and the
channel was known as Publisher Stores. Next, On Device Portals (ODP) made an appearance to enable
subscribers to browse and purchase value added services in a more consistent way. However, ODP served
only targeted brands of devices, particularly mobile phones. As more and more next generation
Internet-enabled devices were introduced into the market, service delivery through these portals could no
longer meet the needs of subscribers.
When the iPhone was launched, it changed the way subscribers browsed, purchased and installed
applications. Although the concept of VAS did not change, Apple had successfully re-engineered a user’s
purchase experience through its App Store. The trick was to make it convenient for users to nd, download
and buy applications and at the same time, make it easier for application developers to reach users.
Following Apple’s successful App Store launch, the Mobile Stores fad began with device manufacturers such
as Google Android, Sony Ericsson and RIM introducing their own application stores.
Not wanting to lose out on the gold mine and encouraged by the fact that users are hungry for pushed
applications, some Operators have jumped on the bandwagon. This marked the start of Carrier ShopFronts
trend led by Operators such as China Mobile1 (Mobile Market), South Korea Telecom 2 (T-store), T-mobile 3
(T-Mobile web2go) and Orange (Orange Application Shop).
As a result of the above evolution, there are 4 different categories of application store providers:
1. Platform vendors - Google Android, Microsoft Mobile
2. Device Manufacturers - Apple, Nokia (Ovi), RIM, Sony, Nintendo, Microsoft Xbox
3. (Independent) Mobile Storefronts - Getjar, Handango
4. Operators - Vodafone (Live), OrangeWorld, O2 Active
1http://www.pcworld.com/article/163485
2http://www.electronista.com/articles/09/04/14/sk.telecom.app.store.due/
3http://mobile.slashdot.org/article.pl?sid=08/08/09/1349208
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6. Application Stores: How Operators Can Create a Winning Case
s
o nward
2009
8 Application
200 Carrier Warehouses
ShopFronts
Mobile • As more and more
0
2 00 Stores • Telcos started to join apps stores are
built, warehouses for
into the Appstore
• Qualcomm (Brew), game after the iPhone apps might replace
On Device Handango, Nokia showed telcos how traditional app
Portals (ODP) Download!, Apple hungry users are for stores
9 8 Appstore, Google pushed apps
19 • Offer a Browser Android Market, • Warehouses: Gets
Publisher Experience for Microsoft, RIM • Joint Innocation supplies of
users to buy apps application center initiatives between applications from
Store to buy apps from developers
and Samsung telcos such as with
a Operator Portal application store Verizon, Softbank and (suppliers)
• Users buy
(not successful) (beta) China Mobile has
applications
begun to surface • Retailers: Operator
from publisher
• Remember stores or software
stores
iMode? stores picks up
• Eg: Nokia Horizon
Figure 2: Evolution of The Application Store Industry
Within a short span of time, the telecommunication industry has been stirred up with new promises of how
application stores can pave the way for increasing ARPU.
Industry experts seem to spell out application stores as a billion dollar industry. Juniper Research estimates
by 2011 that the majority of all applications-related revenue will originate from applications delivered via
applications stores.
The forecast also revealed that mobile applications’ direct and indirect revenues are expected to exceed $25
billion by 2014 as shown in Figure 3.
This trend will continue to grow, contributed to by 4G penetration (both WiMAX and LTE) which gives
subscribers the opportunity to experience better mobile voice and data services, especially those through
application stores.
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7. Application Stores: How Operators Can Create a Winning Case
Source: Juniper Mobile Applications & Apps Stores Business Models, Opportunities & Forecasts 2009-2014
Figure 3: Total Market for Mobile Applications and VAS Revenues
Outcome of The VAS Evolution
The evolution of VAS is contributed by several Subscribers are given equal opportunity to enjoy
factors, primarily the change in delivery methods applications as the application store is built to be
and the interest shown by other stakeholders in the device and platform independent, while content
ecosystem. This has created different business developers reach a wider audience. And the best
models in the industry, with varying revenue-share news - Operators bene t from a larger piece of the
models. revenue pie, contributed to by application sales and
connectivity (user access fee).
In the device-dominated model (for example, Apple
and RIM) and platform-dominated model (for In short, the application store indeed looks very
example, Symbian and Android), bulk of the revenue promising for Operators. The challenge however lies
from application sales is reaped by the device in how Operators can ensure that subscribers will
manufacturer/platform owner and content purchase applications from them? How does an
developers. Operators on the other hand only earn Operator add value compared to its competitors,
from user access fee and a margin from device device and platform vendors?
sales.
However, this trend is gradually changing. Lured by
the potential ARPU gains offered by the application
store, Operators advocate the idea of owning one
themselves. This model gives Operators full control
over the value chain in order to provide the best user
experience through a walled garden.
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8. Application Stores: How Operators Can Create a Winning Case
The Winning Application Store Strategy
Following the bold step of Operators such as T-Mobile and China Mobile, some others have started to launch
their own branded application store.
On the other hand, it may cross the minds of many – if this market has many existing players at this point of
time, what does it take for an Operator to succeed then?
The good news is, Operators have existing assets that will support their goal of launching an application
store.
By using the right avenues to tap on these assets, Operators can fast track their venture into this space.
There are 7 key factors that determine a winning application store strategy for Operators.
vit y
Connecti
d
Integrate
e for ystem
Fair Gam Ec o s
ers
Develop
Winning
for
Strategy ree
Multi Op erators Hassle F
r Billing
En d U s e
OS ism
Device & Me cha n
Support
Focal
-
Location Point of
ba se d Ac c e s s
Content
Figure 4: Key Factors That Determine a Winning Application Store Strategy for Operators
Connectivity
Simply said, connectivity is the fuel required to Connectivity forms the very foundation, without
transport any application to subscribers. Though which any application store, regardless of how cool
often over-shadowed by apparently more important or entertaining it is, cannot operate. Operators must
aspects within the application store ecosystem, realize that they are in possession of an essential
Operators have been playing a very important role in sector of the application store, and this sets them on
the ecosystem right from the birth of application the right path to owning an application store. Since
stores. Sadly, this role has been marginalized, connectivity belongs to the Operator, why wouldn’t
resulting in Operators not gaining any monetary they also own an application store and enjoy
bene t from sharing precious bandwidth. signi cant revenue gains?
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9. Application Stores: How Operators Can Create a Winning Case
Integrated Ecosystem (Applications Management, Billing & CRM)
A successful application store should place Ready Billing Mechanism
emphasis on both the front-end and back-end
mechanisms, particularly the applications Another advantage that Operators have is a ready
management, billing and CRM. billing system, which includes options for prepaid
and postpaid payments as well as exibility in
offering interesting rebate packages. This factor
CRM Capabilities enables Operators to differentiate from other
players such as Apple, which typically have less
On the front end, the system serves as a platform to feasible or preferred billing options.
push applications to subscribers. It serves as an
online shopping mall that hosts various types of The application store system should easily integrate
applications and it is the very place subscribers with Operator’s existing billing system, allowing a
interface with the Operator’s application store. single point of access to manage billing.
Hence, the front end should be managed carefully to
meet the demands of subscribers, failing which,
Operators might end up in a situation where their Applications Management
value-added services are not discovered by the
right audience. At the back end, the application store system should
be built to support an automated cycle of certifying
This is where the Operator has an advantage as they an application. The right ows should be
are they only entity within the ecosystem with a implemented to ensure applications submitted by
holistic view of subscribers’ lifestyle patterns based content developers are properly scrutinized and
on their pro le and purchase history. The Operator’s tested before releasing to subscribers.
CRM system provides an abundance of subscriber
data which would assist in channeling the right This relieves Operators from the manual process of
applications to the right subscribers, at the right managing applications, and at the same time ensure
time. all deserving applications are made available to
subscribers.
It’s important for the application store system to be
equipped with arti cial intelligence that integrates In short, deploying an application store is about
with the Operator’s CRM system to leverage on the creating a whole ecosystem to support, develop and
wealth of subscribers’ behavioural information. provision applications both online and at the device
Based on this information, Operators have the level.
opportunity to make compelling recommendations
to subscribers and meet their demands for
personalized content.
Aside from CRM resources, the front end needs to
hold a strong visual and experiential appeal to
subscribers. Hence, it is important that the interface
is designed to be dynamic and captivating.
Additionally, subscribers’ end-to-end experience
must be focused on convenience and simplicity for
a smooth purchase process – from browsing to
purchase, installation, usage and updates.
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10. Application Stores: How Operators Can Create a Winning Case
Hassle Free Billing System
Operators have an established and trusted billing them from shopping online. Application purchases
relationship with their subscribers, which presents a can be charged directly to the subscriber’s
hassle free billing and payment system for the latter. scheduled (eg. monthly) bill.
With prepaid and postpaid payment options, credit
cards no longer need to be the settlement medium. Meanwhile, having a direct billing relationship with
the Operator puts the subscriber at ease. In the
This enables all subscribers to enjoy applications event of issues arising from the purchase of
without worrying about security and fraudulent applications, subscribers are able to reach the
risks, which is one of the main factors that deter Operator for assistance and settlement.
Focal Point of Access
Though once upon a time content was regarded as Unfortunately, the issue with the current mechanism
king, today it is no longer the anchoring factor. On is the existence of too many distribution channels
the contrary, effective content aggregation and (see Figure 5). This leads to a fragmented structure
communication sit on the throne. that does not complement each other. Subscribers
are faced with a multitude of touch points which
Many Operators today offer value-added services to ultimately leads to poor end-user experience and
subscribers, which extends beyond connectivity. low purchases.
Touch
Point Application Call-in buy On-demand
Mobile store (purchase through downloads
download portal Operator’s (SMS buys)
customer hotline)
Application
/Service Caller Sports
Mobile games Wallpapers ringtones updates
Figure 5: Fragmented Distribution Channels to Access Applications
A successful application store must consolidate all reduced and free previews should be made available
value-added services and applications within a single so that subscribers are given an opportunity to
platform, hence subscribers bene t from a focal evaluate an application prior to purchase.
point of access. Distance to purchase must be
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11. Application Stores: How Operators Can Create a Winning Case
Location-based Content
Next, Operators can offer more localization Among the various local content categories, the
compared to application stores owned by device number of people accessing online directories has
manufacturers or operating system vendors as the seen the greatest increase during the past year, at
former understands the local market and subscriber 73%, followed by restaurants at 70%, maps with
demands. With this service differentiation, 63%, and movies with 60%. This further strengthens
Operator-owned application stores would generate the need for localized contents.
more demand for applications and keeps the
ecosystem healthy. Usage of applications like coverage maps, traf c
updates, and restaurant recommendation not only
According to a research conducted by ComScore, enhances a subscriber’s everyday life, but keeps
the number of people who sought local information them coming back for more, thus driving demand for
on a mobile device grew 51% within just one year the entire application ecosystem.
(from March 2008 to March 2009). ComScore
de nes local content as "searching for information
on maps, movies, business directories or
restaurants."
Multi End User Device & OS Support
Operators are faced with the daunting expectation Synchronization capabilities between multiple
to provide applications/services that can be devices further enriches user experience as they are
supported by multiple devices, across all platforms not restricted to one device, for example a smart
with a consistent user experience. This gives all phone. Instead, they can extend similar experience
subscribers an opportunity to indulge in the to other devices such as a laptop of desktop
application store regardless of the device or computer.
operating system used. For example, Apple’s App
Store is only con ned to iPhone users. Do Aside from subscribers, a cross-platform
subscribers need to purchase an iPhone to enjoy application store is a stronger incentive for content
applications? developers as they are assured that their master
pieces reach a wider target audience.
Operators can now break this monopoly and offer a
similar experience to all subscribers via the
Operator-owned application store.
Fair Game for Developers
It is widely expressed that the visibility of Hence, with thousands of applications out there, an
applications residing in Apple’s App Store has been effective application marketing mechanism needs to
a great disappointment to content developers. be in place to give all applications a favourable
Apple’s practice of ranking applications by price selling ground. Applications should have the
drowns premium applications, while cheap and free opportunity to compete in its own space, ranging
titles receive a more preferable placement. from popularity, rarity, uniqueness and pricing. This
mechanism should give deserving content
developers the visibility they deserve.
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12. Application Stores: How Operators Can Create a Winning Case
Embark on the Application Store Journey Today!
Operators may have different strategies in implementing their own application store. Some might prefer to
build an extensive ecosystem that allows content developers to upload application to maximize returns. On
the other hand, some might prefer to be cautious and start small by promoting existing applications.
Whichever the desired strategy, Green Packet provides the ideal services management platform to help kick
start an Operator’s application store. This innovative solution, In nit Services Management Platform (ISMP)
is specially designed to start up an application store by leveraging on the existing strengths of the Operator
for a winning case. Hence, it enables Operators to launch an application store within a short span of time for
a faster time-to-market.
ISMP is based on a client-server architecture model which can be customized to re ect Operators’ branding
and campaign needs.
Free Consultation
If you would like a free consultation on how to launch your own application store, please contact us at
marketing.gp@greenpacket.com (kindly quote the reference code, WPIAH09 when you contact us).
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13. Application Stores: How Operators Can Create a Winning Case
References
• Juniper Mobile Applications & Apps Stores Business Models, Opportunities & Forecasts, 2009-2014
• Airwidesolution’s Understanding how Operators will utilize the App Store Phenomenon
• Alott Communications. “Global Mobile Broadband Traffic Report, Q2/2009”, July 2009
• Your very own App Store by John Tanner, Telecom Asia, January/February 2009
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14. Application Stores: How Operators Can Create a Winning Case
About Green Packet Solutions
Green Packet Solutions, part of the Green Packet Berhad group of companies, is a leading developer of Next
Generation Mobile Broadband and Networking Solutions. Our mission is to provide seamless and uni ed
platforms for the delivery of user-centric multimedia communications services regardless of the nature and
availability of backbone infrastructures. Founded in San Francisco’s Silicon Valley in 2000, Green Packet
Solutions has expanded its global footprint to Kuala Lumpur (Headquarters), Singapore, Shanghai, Taiwan,
Australia, Bahrain and Bangkok.
Green Packet Solutions empowers Operators to improve ARPU via leading edge carrier-grade connectivity
solutions, services management platforms and interoperability-tested WiMAX Modems. Green Packet
Solutions’ products offer best-in-class performance and are of the highest quality, ensuring our customers
are ALWAYS BEST CONNECTED!
With R&D centres located in USA, Shanghai, and Taiwan, we are on the edge of new developments in 4G
(particularly WiMAX and LTE), as well as software advancement. Green Packet Solutions’ presence around
the world shouts our global capabilities and localization abilities. Furthermore, fellow symbiotic players can
leverage on Green Packet Solutions’ strategic alliances in the telecommunications industry to strengthen
one’s stake in the ecosystem.
For more information, visit www.greenpacket.com
www.greenpacket.com
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