It’s the dream of every operator: Regain control over the billing of content to their subscribers. We’ve had the walled gardens of Vodafone Live! and i-mode. And now operators are faced with handset manufacturers creating their own, successful content stores: Apple’s App Store, the Android Market, Microsoft its Windows Marketplace, Nokia the Ovi Store… Are operators reduced to becoming the bit-pipe?

It’s undeniable that app stores are a big success. Apple’s move created a new easy way to use all those web services you got used to on your mobile phone, anytime, anyplace. It showed that with an easy interface, where finding and purchasing/downloading new services is as easy as the click of one button, people are eager to explore and use their mobile phone for more than just calling, texting and playing music. The data streams are finally kicking! But the revenue streams on the content are completely by-passing the operator. Beside the developer, who usually gets around 70% of the revenue on all stores, the credit card companies, billing providers and the handset manufacturer are sharing in the revenue.

Is it bad? No, but we have to remember that the vast majority of subscribers are using feature phones rather than smart phones. And also that billing in an app store is usually done using a credit card, which can be a barrier for many. The operator is in a good position to regain a position in the content distribution value chain:

• Often overlooked, but operators have some of the most advanced real-time billing systems you can imagine, with millions of billing transactions per day. Customers already have a billing relationship with them, so making purchase could be as simple as the click of a button.
• Operators are in control of one standard element across all handsets, independent of the manufacturer: the SIM card.
• The SIM card is evolving to become a full-fledged application host. One of these applications will be a web server that can serve pages to the browser of the handset. The pages can be updated over-the-air (!) and can make use of all the features of the browser
• The browser is more and more becoming an application browser rather than a static page browser. With Javascript and HTML5, advanced applications can be made that look and feel like native applications. This is true for the desktop computer, but will also be the reality of the mobile phone.

I’m not predicting a demise of the native apps, like some believe for the desktop (see Google OS for example). Native apps always have an edge over the browser especially when it comes to fully utilizing the hardware capabilities (graphics card for games, gps, compass, accelerometer) of the device. But the market will remain fragmented: Android, Symbian, iPhone OS, Windows, Linux… I don’t believe this will change. Native app developers will need to invest in all those platforms if they want to target the biggest group.

The browser market on the other hand is finally starting to converge. Everyone seems to agree now that following the standards is the best way to go. The small tweaks needed to adapt your web app to the various browsers are a minor investment compared to that of porting a native app to another OS.

Operators would do well to think of an easily accessible, sexy portal for all their customers. A portal that makes it easy to find all these web apps written for a large base of handsets. A portal where it’s as easy to install an app on your phone’s desktop as it is on the iPhone or the G1. A portal where developers can bill their customers by one click of the button (either one-time fee or subscription). And finally a portal that doesn’t shut the doors, but also links to the other app stores out there based on the handset used.

The portal (with the installed apps) should be stored locally on the phone for quick navigation. And the best place for it is the SIM card. I know, handsets mostly don’t support it yet. But most handsets also don’t have advanced HTML5 with Javascript browsers yet. But it’s coming. And it’s the only way people will start using these services massively. So forget about the current feature phones as a means to get the massed on internet. Start investing now in your future App Store.

Links to more information:

• Gemalto
• The specification is ready: OMA-TS-Smartcard_Web_Server-V1_1-20090512-A can be found on the openmobilealliance website (currently page not found error).

Tags: app store - gemalto - mobile - multimedia sim - sim card