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Open Mobile Summit: opening up for mobile Internet growth

The Open Mobile Summit, held in London last month, raised a number of interesting questions about the evolution of the value chain for mobile applications and services. There was much discussion about what ‘openness’ really signifies, and how important it is, in the context of the emerging mobile Internet world.

Deutsche Telekom cited one immediate concern for operators: that the proliferation of app stores – from vendors, operators, Internet giants and, undoubtedly, more players in the future – will create silos of applications that are neither interoperable with each other nor portable from one device to another. The fragmentation that this silo effect creates is likely to slow market growth. It also has the potential to confuse and degrade the user’s experience, because subscribers are faced with too many different mobile storefronts along their mobile Internet journey, and are offered different versions of the same apps, with no immediate means of telling which will work best for their particular device or needs.

Apple’s success is based on open mobile development within a closed ecosystem

In the meantime, the vendor that inspired the app store stampede, Apple, continues to demonstrate the power of keeping things closed. A number of presenters at the conference cited dramatic statistics on the huge success of the iPhone in driving take-up of applications and mobile data usage. TeliaSonera reported that its own iPhone subscribers generate five to six times as much mobile data traffic as users of other smartphones, while ARPU for iPhone subscribers is more than twice that of other smartphone users in most of Scandinavia and the Baltic countries.

Although applications developed for the iPhone are not portable to non-Apple devices, one of the cornerstones of Apple’s success is its open and transparent development and distribution environment. Clearly laid-out revenue sharing arrangements, one-stop-shop distribution through the Apple App Store, simple software development kits and access for developers to most of the ‘cool’ functional features of the phone make iPhone development relatively simple. This combination of commercial and technical openness makes it both inspiring and cost-effective for smaller developers, as well as larger media and software companies, to bring new iPhone applications to market.

Other development platforms that are supported on a much greater number of devices have been far slower to gain traction with mobile developers, and the resulting apps have not generated anything like as much take-up or interest as those for the iPhone. Google cited the development of HTML5 – which is going to be supported on a very wide range of handsets – as a critical step in enabling developers to create more-universal applications. However, it is likely to be several years before this filters down to the commercial apps market.

What can mobile operators learn from Apple’s success? In our view, the main message is the value of facilitating a simple and easy mobile Internet experience, opening up access and putting the subscriber in control by offering simple all-you-can-eat mobile data packages, and then stepping back to see what happens. However, operators also need to become more comfortable with the idea of opening up access to their own subscriber information, if they want to help developers and to facilitate a positive user experience. For example, Deutsche Telekom raised the idea of a making a single address book accessible from multiple screens, but currently would still be unwilling to allow third-party service providers to access the necessary information. Finding an appropriate revenue model for permitting such access, and ensuring it is done with full subscriber knowledge and consent, is a critical component of openness, and a significant challenge for the industry, if mobile applications and Internet usage are to reach their full potential. 

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