![the_next_wave_in_mobile_app_commerce The Next Wave in Mobile App Commerce](https://i0.wp.com/www.blackberrycool.com/wp-content/uploads/2011/03/the_next_wave_in_mobile_app_commerce-600x448.png)
Moving from rivers of monetization to lakes of commerce exchange [click to enlarge]
EDITOR’S NOTE:
Terry Hughes, former President of Widality, is Wmode’s as Head of Market Development. Be sure to check out his past editorials too.
The mobile app market is maturing nicely; apps are becoming more sophisticated, routes to market are broader, development times have been greatly reduced, there is a plethora of billing options available, and perhaps most valuable, apps have moved from being the domain of a few niche players to being a critical part of the branding and engagement strategy of most companies. In this sense, the mobile software market has started to resemble the PC software market with a few key platforms to worry about, standardized development tools, and open APIs to enable the many parties in the value chain to connect together.
In terms of distribution, we have seen a massive change. In the old days, the only real hope for developers to achieve success was to get their app on the carrier deck. Therefore, apps were built solely with this goal in mind. Moving into the next wave of the app economy, Handango, MobiHand, Handmark and others came into the value chain and offered alternatives, however, it was only when Apple launched the App Store that the game changed; developers could finally innovate, stars were born, money flowed, and the whole process from submission to payout was clean and simple wherever the developer resided and irrespective of the user’s carrier.
It didn’t stop there; now, enterprises are building their own stores, major brands are offering app downloads on their websites, solutions companies are extending their services via custom-built apps, and app providers are partnering to sell their apps as part of a bigger solution with lucrative bundling and integration deals. This drive towards a totally open app distribution ecosystem has been motivated by the growing sophistication of apps and what they integrate to, the entrance of the big players to the market who are demanding a branded experience for their users, and the desire from developers to get above the noise of conventional app stores to reach their target users more effectively.
In terms of sophistication, two trends are worth noting. First, in the old days, apps were just that – standalone apps that did something very well on the handset they were built for. Now many of the most successful apps are actually services, hosted in the cloud, where the app is a means to an end, i.e. the app is often a fairly straightforward means of simply accessing the service, and it is the service that delivers the real value to the user. Many of these apps actually take an existing service and extend it to the mobile environment. This is something we will see much more of going forward with standardizations like HTML5. The second trend is that of a many-to-many relationship. In the past, an app typically did one thing and connected with one system. Now, due to the rise of open APIs and partner ecosystems that encourage developers to integrate across a value chain, apps will often aggregate data from many sources, and will perform functions into several systems.
Looking at payments, the traditional way to get paid was via the wireless carrier and developers had to work with, and integrate with, each carrier individually. Ironically this has come full circle because the ability to place charges on a user’s carrier bill is still the best way to get paid. However, everything is far more open now that there is a large number of aggregators and with the drive by platforms like Android and BlackBerry to provide carrier billing options in their stores. Although this is all excellent news for the industry, payment options are about to get much more complicated. Flexible billing options such as subscription and name-your-price are two good examples of this new level of sophistication, the ability for a developer to provide an app for free to the end user, but to be paid by one or more third parties that have a vested interest in supplying a service to that user, will become mainstream.
The final area that will become one of the next big battlegrounds in the sector is identity management. The debate over who owns the user, who owns their data, who owns the billing relationship, under what conditions is data shared between parties, and how does a user with 100 apps, 25 services, and 10 payment accounts manage the sign-on relationship with each of them is just starting to begin. The terms “federated ID” and “single sign-on” will become mainstream. The best example of this relationship today is through Facebook which allows users to log on to many services using their Facebook ID. However, in the world outlined above, a world with sophisticated payment options and wide interconnectivity, a world that also provides individuals with the ability to use a mobile phone as a wallet, other players are actively vying to control the “identity management” space, and the stakes are high.
In summary, those narrow and extremely targeted rivers of the early days of the app business have all flowed into a huge interconnected lake. Developers have more options for connecting and selling their apps, mainstream companies have an easy way into leveraging the app economy, rapid innovation is now happening across the value chain, and above all money is being made in a lot of creative ways.
While Wmode has been delivering many pieces of this app economy for over a decade, the company’s new Affiliate Commerce Exchange approach formalizes it for the next wave – it enables anyone in the lake to create an affiliation with anyone else to exchange data and business, enabling commerce to easily flow.