The Cellphone Industry’s Field of Dreams

By Jenna Wortham

Update | 2:26 p.m. Clarification: Nokia’s app store will include 20,000 offerings, which includes short videos and entertainment and media files in addition to applications.

Paul Sakuma/AP Apple’s success with its App Store is fueling fierce competition.

If you build a mobile app store, cellphone customers will come.

At least, that’s the latest mantra of the mobile phone industry. As we’ve noted before, Apple’s wildfire success with the App Store for the iPhone and iPod Touch is fueling fierce competition among the makers of other handset devices, which are all eager to create worthy rivals to Apple’s mobile storefront.

As Microsoft and Nokia prepare the grand openings of their mobile application stores later this year, each company is trying various approaches to entice consumers.

Microsoft, for example, published guidelines for developers who hope to have their software included in Windows Marketplace for Mobile, its upcoming mobile application store. The list outlines applications that will not be permitted, including those that alter the default browser, search or messaging functions; encourage stores other than Microsoft’s; or publish data and location information without permission.

The blacklist could help Microsoft sidestep some of the complaints and controversy Apple has encountered with its murky vetting process for applications accepted into the App Store.

Nokia, on the other hand, is banking on offering customers the most bang for their buck. The company plans to debut its mobile application store with 20,000 apps and media offerings, free and paid, available for download. Nokia said it will reject objectionable content, like pornography and gambling applications, but won’t impede services that compete with its own products. By comparison, Apple took the wraps off its App Store with just a few hundred programs and Google’s store for the Android operating system offered just a couple of dozen programs initially.

The real question is, will any of it help these companies grow market share? Apple’s App Store for the iPhone and iPod touch has set the bar high: The company recently announced it had exceeded a billion downloads. Update | 2:26 p.m.

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KenC May 8, 2009 · 10:51 pm

The original article says, “The store is so large because Nokia is stocking it with a broader selection of digital content. The company says there will be lots of entertainment and media files, including an entire category of short videos and “mobisodes.” The store’s 20,000 items will be across all of these categories, not just apps.”

So, if they include a video clip, aka entertainment and media file, then that counts as one of the “20,000 items”! Are you sure “items” qualify as “apps”? Is this just a way for them to create a headline?

I mean should Apple say they have 8M apps available since you can buy every song in the iTunes store thru the iPhone?

Did you apply any commonsense to Nokia’s press release? Do you really think they could have developers write 20,000 apps, in relative anonymity? Every mobile developer conference where top developers have been interviewed, they notably never mention developing for Nokia. It’s iPhone first, then Android, then WinMo and Blackberry. Sure, that’s US-centric, but even the Nokia guy admits, the US market is the biggest for mobile apps.

lrd May 9, 2009 · 6:22 am

Talk about setting the bar high; by the time Nokia & MS open their lame me too stores, Apple would have over 50,000 apps and probably over 2 Billion downloads!

And with iPhone OS 3.0 threatening to develop yet another ecosystem; it maybe closer to 3 Billion downloads and over 60,000 apps.

I say all the competitors face a steep climb.

Cfc May 9, 2009 · 8:56 am

App Store apps have gone exponential.

Exponential growth in nature is always unsustainable. So, a leveling should be expected.

App prices have raced toward zero. Developers may defect to other platforms, or simply pack it in.

Field of dreams…… with emphasis on dreams.

DrakeBullet May 9, 2009 · 9:57 am

The press coverage continually overlooks Apple’s tremendously successful application delivery and management engine – iTunes. It’s already on a multitude of computers (mac & windows). Sure Apple is goofy about its developer rules, but their success (phenomenal user experience) is built on controlling their vertical stack. iTunes is the application that ties it all together.

The Microsofts, Nokias, and RIMs of the world will need some simple and easy to use application to manage the content, but unless that’s Microsoft and everyone adopts their application, then the market will stay as fragmented as it is.

iTunes and the App Store provide a very compelling reason for me to stay with an Apple phone (beyond the phone itself). Other phone makers have been too flaky over the years with their proprietary and largely useless applications.

Marco May 9, 2009 · 6:28 pm

Apple only wants the highest margin part of the computer and phone businesses. Nokia will be perfectly happy to scoop up a third of the bottom 90% globally.

Imran May 10, 2009 · 8:07 am

Nokia rocks and will definitely beat apple.

Dave Barnes May 10, 2009 · 12:41 pm

@DrakeBullet
“The press coverage continually overlooks … iTunes.”
I agree. Ease-of-use is the killer app (pun intended) for Apple.

@Cfc
“[iPhone] Developers may defect to other platforms, or simply pack it in.”

Maybe. But I think that there will be many apps selling for less than $3. After all, if you are paying more than $2000 for your phone over a 2 year period, you can afford to spend $50 on apps during that period. Free is nice, but even $4.99 is a throwaway, in my opinion.

Vincent May 10, 2009 · 9:30 pm

Everybody in the U.S. seems to have grand illusions with regard to Apple’s iPhone and the future of the telecom market. As far as I know, Nokia’s global cell phone market share is close to 50%. They’re building open, complete and relatively cheap phones.

I do think the iPhone is quite a nifty device tackling a certain niche market for the relatively uninformed Apple, iPod and hipster crowd that had been overseen before. Apple will never go below a certain price, though, and Nokia is a company that has dominated the mobile phone industry for quite a few years now and it will only take a few months before they bounce back with a handset that will blow the iPhone out of the water (as far as the 3 year old N95 doesn’t already).

Don’t see Nokia as some old, slow beast. It’s not Motorola. In case you hadn’t realized, Nokia’s revenue exceeds that of Apple, and almost all of that comes from mobile phones. I’m loving the competition though, more innovation for us customers :)

Timm May 11, 2009 · 1:18 pm

@Vincent,

It is not about market share as the 50% that Nokia has is mostly low margin handsets used for voice and SMS, hence with brand loyalty. Applications create a stickiness to the ecosystem which is much more valuable, especially for high margin devices.

As to the iPhone and Touch being for the uninformed, you just have to look at the web traffic from Mobile Safari to see that it is really about usability. The user interface on Nokia and Motorola phones was perverse (in hindsight) and for the masochist,

Nokia has yet to respond in any significant way to the iPhone, they seem to be getting further behind. I doubt the N97 will save them. The value proposition of the new Symbian is great, but they seem to be MIA.

Arthur May 11, 2009 · 1:56 pm

There seems to be some people who want the apps without the ‘phone, or the iPod Touch would have no takers. I guess some folks don’t want device integration.

Richard May 11, 2009 · 2:06 pm

This is an example of superficial reporting which unfortunately pervades today’s mass market media, making no effort to perform analysis or critical review…perhaps to avoid offending potential advertisers. Casually referring to Nokia’s 20,000 “offerings” and denigrating other vendors for the much smaller number of *apps* that they offered at launch is shoddy. Newspapers wonder why people are abandoning them?

Steve Humann May 11, 2009 · 2:11 pm

@vincent, just as you and Nokia welcome the competition from Apple and those who develop for their mobile platform, we “relatively uninformed” Apple users welcome the comparison to your stupendous market share and 20,000 media files.

App Store May 11, 2009 · 2:42 pm

It would it be nice if these companies did something original. Its all about quality. These other companies need to ask apple if the they can somehow license the “Iphone OS” and use itunes, rather than just copy it with something inferior.

Eric May 11, 2009 · 3:52 pm

The author works real hard to denigrate what clearly makes the iPhone and its ecosystem such a powerful competitor. There is simply no way Nokia is going to build a handset that’s better than the iPhone, though I wish they would so the iPhone would get that much better.

Yes, competition is good, but comparing go carts to a Formula 1 racer is an exercise in futility – which is what Microsoft and their buddies are finding out when competing with Apple, and they refuse to really get what makes Apple so good.

Daniel Swanson May 11, 2009 · 4:06 pm

The iTunes App Store is a cultural phenomenon, plain and simple. Its factual and continuing success does not depend upon, nor suffer from whatever glib reports such as these say or don’t say.

It’s very analogous to a seed which started with an idea and then germinated when conditions were right. It’s now a vital plant with desirable and plentiful fruit as well as firm roots.

iPhone 3.0 will bolster the iPhone ecosystem’s appeal, perhaps like the Ruby Red bolstered the grapefruit–sweeter, juicier, and still every bit a grapefruit.

The various “me too’s”, try as they may, at least so far, don’t seem to realize that it’s not just the look, not just the touch screen, not just an app store–it’s the whole ecosystem, one of its vital roots being the Macintosh operating system, OS X. No one else’s got that.

I seriously doubt that anyone else is even capable of bettering that at this late stage of the game.

CeeAyy May 11, 2009 · 5:21 pm

Vincent…

It’s funny that you talk about the uniformed when you are so obviously one of them. You don’t understand why people like the iphone. I’ll give you a hint… being cool has nothing to do with it. Not one person who owns one thinks they are cool because they have one. Yours is a juvenile argument. It reminds me of a kid on the playground… “You just think your cool cause you have XYZ”. Riiiight. Maybe it’s just that you feel inferior for no good reason. Imjussayin.

Also, you are comparing apples and oranges. Do you understand that Apple has just one iPhone and Nokia has many different models. Comparing the sales of several models against the sales of one model is not the sign of someone with an understanding of the situation. Try comparing one smart phone model to another.

Then there is the idea of market share. I can guarantee that Bentley does not have a large market share as compared to Toyota, but guess what… as much as I like my Toyota, I’d rather own a Bentley. Market share matters when you are thinking of buying a company or stock, not its products.

Then you talk about revenue… What does that have to do with the price of tea in China? Again, if I was buying the company that might matter. I’m not buying the company. As long as the company is profitable and will be around to offer support, that’s all i care about.

Basically, you sound like a fanboy. Nowhere in your post did you explain why “your phone” is better. Actually, I don’t care if it is. All i know is that i like the phone I bought.

The reason I like it, and the reason most people like the iPhone, is that it is easy to use and it has features that people like. My daughter understood how to use the phone at 2 years old and she doesn’t even read yet. She unlocks it, chooses her games (bowling, bubbles, ongoal, and fastlane), and plays. That should tell you something. BTW, the App store is a huge bonus.

brooksbs May 11, 2009 · 5:41 pm

No way Nokia can have 20,000 apps at launch. Does the writer of this article understand what an app IS?

Josh May 11, 2009 · 6:08 pm

The simple fact is that Nokia/Microsoft just can’t compete with Apple in the “App” arena. The main reason why is because Microsoft still doesn’t understand why they can’t out-sell the iPod even though products like the Zune offer very similar options.

Very simply put, it’s because Apple doesn’t play down the importance of the consumer. Yes, they certainly charge more than almost any other PC maker, and the money it costs to buy an iPhone/iPod may seem ridiculous in comparison to a $50 phone/MP3 player/camera. But the true value of the product you buy is not about whether the product is built well, but whether or not you can use it, it serves it’s purpose, and it continues to work long enough to get your money’s worth out of it.

Nokia makes decent products, but they don’t have the focus on the consumer. Most people don’t want to have to buy a new phone every 6 to 12 months. They want something they can use for several years. The App store approach has been ingenious because it’s allowed the singular product – an iPhone – to grow into a multilayered experience. And the awesome part is, you can continue to download updates and the phone is still supported nearly two years later. Show me a Nokia phone that’s 2 years old and it still supported by the company.

With Microsoft on board, you can bet that you may get a few months of joy from the new app offerings for your Nokia phone, only to find that less than a year later, you’ll have to buy a new phone to support the newer offerings. Yes, it makes Microsoft tons of money in the computer world, but I don’t think there’s as many people in the mobile world willing to buy a new phone every time a new “OS” comes available.

vince7 May 11, 2009 · 6:08 pm

The competition should benefit customers greatly. I see MS having the greatest impact with an app store initially than Nokia. My reason for this point of view is that I am still rocking a Dell Axim X5 with Pocket PC 2003. Developers are still creating and updating software for these older handheld devices. Dell and other OEMs might have walked away from the buyers of those but many programers are keeping the platform valid.

Devices like my Axim X5 actually paved the way for what we call smart-phones today. My Axim has a touch screen. It also has POcket PC versions of MS Office. It can be synced to any Windows based computer/laptop. I also have just about every accessory ever made for the Axim. Bundled with a wireless Compact Flash card, I can take advantage of free wifi or my own wireless home network.

I could not afford to keep my Sprint unlimited service any more due to my job loss. I sold the HTC Touch I used with that service. I now use a Samsung Hue II. I have basic no frills calling. Even though the Touch is gone I still have a need to carry files, contacts and even music with me. The Axim is perfect for that and doesn’t add to my cost of my phone service.

Google Pocket PC software for a glimpse at the base of software already available. Nokia might have a problem.

Larry May 11, 2009 · 6:47 pm

Timm and Eric, while I like the iPhone and am an Apple stockholder (of long standing); your takes are too harsh.

Timm, Nokia doesn’t only make commodity-type low-end phones. That may be what WE get in the US (at least until recently); but their top offerings actually far exceed the overall capability of the iPhone. Dual cameras for video Skyping, video cam function, memory card slots, hardware keyboards, built in Flash players, good browsers, the first with accelerometers, etc. etc. Plus, again, while we don’t see it, they dominate the rest of the world market.

To further the Toyota v. Bentley analogy; Nokia is more like Mercedes-Benz: they make low-end utilitarian vans and taxis and multi-$100,000 luxury cars. Apple makes Lexuses: nicely executed phones that are easy to use and more trouble free than the average high-end vehicle; but not very ‘challenging.’

On the other hand, I don’t expect (and I doubt Nokia does) that their App store will really rival Apple’s. Still, they’ve had these kinds of offerings for far longer, although their ‘store’ concept was much less focussed. Apple clearly ‘gets’ both how to brand their products and how to focus in with laser-like effect on what consumers want the most. And their implementation of the App Store has improved the functionality of the (at least hardware-wise) mid-tech iPhone. They have provided much of the flexibility and dimensionality that Apple left out.

And to build on what Vince7 said, I’m a big Palm PDA fan, and there are 10’s of 1000’s of Palm apps (not as neatly collected in 1 store); but that wasn’t enough to keep Palm in front. My Palm LifeDrive does many things very well (some things much better than the much newer iPhone).

Kris Swensen May 11, 2009 · 7:38 pm

If I remember correctly, Motorola had an app/game store, per se, that I could buy additional games to download from. I remember it when I was bored at the California DMV, and was looking to pass the time with my RAZR about 2 1/2 years back (right before the iPhone’s initial launch). I was able to log on to the game store, and browse the game I wanted. Then download it, while charging it to my cell phone bill. It didn’t contain any utilities, novelties, or what-have-you. I remember it just being games.

But my hardly remembering Motorola’s app/game store just goes to show how insignificant it was. Apple came out of left-field and did it right. Because they always know what their customers both currently want, and “never knew that they always wanted.” It’s how Apple has played the game over the last decade, which is why they’ve been so successful. And why no other company can rival them. Google has a shot. But I don’t think anyone else will come close any time soon. Time will tell though.

Chris May 11, 2009 · 8:06 pm

I love the iphone, the single phone that made a revolution in the mobile industry. PC Users are more familiar with Nokia and other cheap brands, amazingly they think their products are better, but well we all know who started first an app store, which company they copy. Nokia, Microsoft, etc. all want to follow the leader. I will stick with Apple, i paid more but i get more.

Vincent May 11, 2009 · 9:47 pm

Oh, and FYI, I don’t own a Nokia. Kbye

Bruce May 12, 2009 · 12:36 am

Vincent, while you were geeking out on your most highly of technical points, you only proved why Apple is on top. Most folks in mass are NOT super GEEKS. It’s the end user experience that counts and Steve Jobs got that right all the way back in ’84 with the first Mac.
The reason that Microsoft and all others are always playing catch up is because what is on the market now with Apple was conceived years ago. You have no idea what kind of culture changing technology Apple has in the pipeline right now. If anyone thinks the iPod or iPhone stormed the marketplace or culture just wait! Holy crap Batman, you ain’t seen nothing yet.

Eric May 12, 2009 · 12:44 am

Larry,

Yep there were thousands of Palm apps. I’ve owned to Palms and my experience with the apps is they were not that great, and they were vastly over-priced. No doubt testament to the difficulty of writing apps for Palm vs the SDK for the iPhone. Not to mention the graphics power of the iPhone which maybe the Pre might come close to.

Yes, Nokia is different. But the tone of the article is that the app acceptance process is murky. Nonsense. The rules are there and they are sometimes not followed. Understandable. Guess how many people apple had to train quickly to approve apps to get this thing ramped up, there are going to be bumps. But the rules are clear and easy to read. Most whining about getting accepted are from people who didn’t read closely enough.

And since when was 500 a “few hundred?” Many very good points in the story. Spurring competition, etc. But some obvious stretches, too.