It’s always interesting when telecom competitors ally themselves to fight a common enemy. We’ve seen this with Microsoft and Apple countering the rising success of Google, and we’re seeing it again as twenty-four telecom operators have formed a cumbersome alliance to produce a platform that will deliver applications to a large spectrum of phones in a vain attempt to counter Apple’s wildly successfully App store.
According to Reuters, this unwieldy conglomerate is supported by three of the world’s largest device makers—LG Electronics, Samsung, and Sony Ericsson, while several significant carriers, including AT&T, Vodafone, NTT Docomo, and China Mobile, have also backed the fledgling program.
But its no wonder telecom operators want to get a piece of the App store action. The downside of offering device such as the iPhone or the iPod Touch is that they promote loyalty to the device instead of to the carrier, why do you think so many customers have put up with AT&T so long? This sort of consumer loyalty leaves the carrier out of luck when it comes to the revenues generated by downloading mobile applications.
For Apple, the App store is a critical piece of this customer loyalty and a major revenue stream, as it offers over three billion applications that allow subscribers to custom build their own individualized mix of software for their handsets. There is simply no other carrier or device that offers the wide variety of options that are at your fingertips at the Apple App store.
The problem with this new alliance, as I see it, will be bureaucracy and competitive sharing. Many of these operators who have joined this alliance are fierce competitors, and have always worked to one-up each other to win market share.
I can’t see them all readily sharing their trade secrets and competitive niches for the greater good. Further, as Mark Newman, chief research officer at Informa Telecoms & Media states, “I do question whether such a large group of mobile operators will be able to achieve the level of cooperation and integration required to make this initiative a success.” Will they be able to make any quick decisions or any decisions at all, when twenty-four voices need to have their say?
Beyond this, however, is the issue of actually providing customers applications that they would want to purchase, and analysts are already skeptical over the willingness of software producers to take a risk on producing content for the alliance’s unproven platform, especially with the constant lure of the solid customer base the App store enjoys.
Apple is a company that has garnered success for themselves through sleek and sophisticated products backed by a well-managed and well-oiled machine, and it remains to be seen whether a bulky alliance of telecom competitors will be able to do anything to challenge the supremacy of their App store.