App Stores are a ‘Bold’ Move for Operators, But Can Pay Off

Apps World London, which concluded yesterday, included a vibrant debate on whether operators should have their own app stores.

According to a report from Mobile Business Briefing, Eric Morhenn, director of strategic partnerships and devices for Qtel International, was opposed to the idea, offering three primary reasons for why app stores aren't a good fit for most carriers.

The first is that there are of course already so many good app stores — why be a late-comer in an already crowded marketplace?

Secondly, the revenue potential for an operator will never match the cost of building out and operating the app store, Morhemm argued, noting that in addition to free apps, there the small income from each app is split amongst a number of parties.

And finally third, there's a "risk for operators from apps going through the store," Morhemm said, according to the report, should the app be infected with a virus, spamware or malware. Beyond the technical risk, this could damage the carrier's relationship with customers.

Javier Lorente, head of customer interface for Telefonica Digital, argued for the opposite, explaining that the motivation to run a store isn't to make money, but to deepen the relationship with the customer.

No one is in that space to make money, said Lorente. "Apple is not there for that, Google is not there for that." 

He reportedly added that Apple doesn't make a profit from its enormously successful App Store, and that it costs Apple approximately $3,000 for each app its adds.

The benefits of an app store to an operator are possibility of offering a smaller, more curated store that's more helpful to a consumer. Carriers can make us of the data they have about customers to also offer more customized options and to make recommendations.

Research firm Canalys has also argued for this. Analyst Tim Shepherd, writing in a July report, described carriers as being "well positioned" to offer targeted promotions and recommendations.

"Mobile apps are a disruptive technology force," Shepherd added. "Consumers will continue to value mobile device design and functionality, but the quality and availability of certain apps will progressively influence their buying decisions. By building on their strengths, operators can capture more of the market, while delivering a better customer experience."

At the event, Telefonica Digital's Lorente noted that carriers, deciding whether to make the bold move of opening a store need to ask themselves, "What do I want to achieve?"