CENTER STAGE: GetJar VP Patrick Mork Talks App Store Competition & Future; Which App Store Models Will “Crash & Burn?” » mobilegroove

In brief: This week we set the stage for a soon-to-be released Netsize report that reveals the business models and payments mechanisms necessary for app stores to achieve mass-market commercial success. Perfect timing to continue the Netsize Guide 2010 “Best Of” series with Patrick Mork, GetJar CMO, and his sober look at the app store landscape.

With 75 app stores (and still counting) open for business it’s clear that creating competitive differentiation is going to be critical in the next weeks. What will likely separate the leaders from the laggards? Choice? Ease of payment? Content discovery? Something else?

Regular readers may recall that the Netsize Mobile Trends Survey 2010, a survey of +1,000 mobile professionals and practitioners across 67 countries, did shed some important light on the requirements for a successful app store.

Among the findings: The four C’s – Convenience, Compatibility, Choice, and Charging are the top enablers of application store success. When asked to rate the unique selling proposition of application stores over other software distribution and sales channels, 65 percent of respondents put convenience (“everything in one place”) at the top of the list. This was followed by compatibility “software applications specific to the device”), choice (“a long tail of thousands of applications to choose from”), and ease of payment (“operator billing and credit card payment support, for example”).

Encouraged by the response to this report (available for download here), which identified the key requirements for a successful app store and a satisfactory user experience, Netsize is gearing up to release a new report that delves into the payment models and mechanisms that will ensure mass-market reach and sustainable success. So watch this space!

GETJAR EXPANDS REACH

With the focus on apps the timing is excellent to move on to another in the “best of” selection of executive interviews from the Netsize Guide 2010.

This week it’s GetJar, the leading independent app store that has grown from strength to strength since it opened its doors for app business in 2006. (With over 300 percent growth year-on-year, GetJar averages over one million downloads per day globally. UPDATE: GetJar counts over 2.5 million downloads per day! )

In April, for example, GetJar announced a “strategic alliance” with Reliance Communications — India’s largest and only telecom operator offering nationwide CDMA and GSM mobile services – paving the way for GetJar to fill gaps in the Reliance app offer. Specifically, GetJat will offer Reliance Communications its extensive catalog of over 65,000 free mobile applications, allowing the operator’s 100+ million subscribers access to GetJar’s massive app store through RCOM’s VAS platform R-World.

Following the alliance with GetJar, Reliance Communications joins a list of providers and mobile operators using GetJar’s white-label, open app store approach including Sprint, Sony Ericsson, 3UK, The Carphone Warehouse and Virgin Mobile France.

GetJar has also taken the wraps off conversion tracking and tools to enable developers to measure the conversion rate of mobile downloads to actual users across all open platforms: Android, BlackBerry, Flash, Java, Symbian, Windows Mobile.

Specifically, GetJar’s Conversion API automates this process of inserting tracking code into apps, allowing developers to analyze the performance of their application by phone, country, and network. In conjunction with GetJar’s Pay per Download (PPD) promotion system, the Conversion API can also help developers manage their cost per active user and optimize their marketing efficiency. (BTW: Just this week GetJar’s ‘Pay Per Download’ made the Meffy (Mobile Entertainment Forum) awards shortlist for the category “Innovative Business Model.”)

INTERVIEW WITH PATRICK MORK

Q: Let’s start with the high-level view. What is the download traffic and what can you tell us about the trends you’re seeing.

A: As you know, we support BlackBerry, Android, Symbian, Flash and Palm [operating systems] and we’re seeing robust growth across all the platforms. A year ago, when I joined the company, we counted about 15 million downloads a month. In August [2009] we hit 55 million downloads a month. So, we’re doing anywhere from 15 to 16 million downloads every week now, and the growth has been pretty significant over the past 12 months. We’re distributing content to consumers in over 200 countries.

In the catalog, I think we have about 53,000 apps live [at the time of the interview] across all the different platforms. Over half are Java apps, which continues to be the dominant platform. Obviously, the other platforms are gaining momentum on Java, so the issue is going to be how the numbers shift with the introduction of Android, the introduction of Windows Mobile 7 and all the efforts being made by Adobe. My guess is Java will lose weight next year.

Q: Some critics warn the avalanche of app stores could confuse and overwhelm consumers. Do you expect a shift there?

A: It’s early days, but I predict 75 to 80 percent of these app stores are going to fail over the next 24 months. The numbers are going to be high because there’s a lot of hype around app stores, which has got a lot of players excited about getting into apps without knowing what is involved and the time and resources needed.

It’s not a core competency for most companies and they don’t realize how difficult it is to moderate content, for example. The excitement around apps is a lot like the hype we saw around games in 2005. A lot of companies crashed and burned and I think a lot of app store initiatives are going to crash and burn.

Q: Let’s talk about GetJar’s partnership with Sony Ericsson. In your view, is this the text book model for the future?

A: I think that it’s going to be a model for a number of handset makers, particularly companies that lack the dedicated resources to build and maintain an app store. I think it’s also going to be the model for a lot of carriers.

But that’s not to say that independent app stores won’t be successful. I think you’ll have two polar extremes. At one end, you’ll have an extremely open, fluid and democratic ecosystem, which is where you can find a GetJar or an Android. At the other end of the spectrum, you will have the super-closed, extremely rigid – yet very well oiled machine. An example here is the Apple App Store.

The guys who are really going to have a rough time are the ones in the middle. They don’t have the size of an Android or a GetJar, nor do they have the quality experience and richness of the applications of an Apple. For the companies in the middle to be successful the solution will be a model like Sony Ericsson’s, one that allows they to focus on their core competency – whether it’s running networks or building handsets – and let the guys who understand content actually manage the content.

Q: The partnership with Sony Ericsson is non-exclusive. Will you do more partnership deals in 2010?

A: Without giving away confidential information I can tell you that we’re in a number of discussions with other equally important partners to do something very similar. In the next four to six weeks [interview conducted October 2009] you will hear of a significant partnership with a major U.S. carrier, which will be our first.

So, the GetJar strategy, as it unfolds, is going to be two pronged. The main focus will in terms of traffic and downloads will continue to be direct-to-consumer, which accounts for 95 percent of our traffic. The other focus will be to build and extend GetJar’s distribution, as either a co-branded or a white-label solution, through partnerships like Sony Ericsson or with carriers.

Q: What is the role of the mobile operator in the application value chain? Based on what we saw in the on-portal space many argue operators are not suited to retail content or apps.

A: I believe operators can play a fundamental role and there are many ways they can do this. Part of what they can do is make sure the interface of the handsets is more conducive to content discovery and download.

I find it shocking that, two years after the iPhone launch, so many handset manufacturers still continue to waste the retail space of their handsets. If you turn on a regular handset today, regardless of the maker, the majority of the home screen retail space is unused. I don’t necessarily blame just the carriers; I also blame the handset vendors. If the operators could convince handset manufacturers to improve the user experience and also improve the handset interface to make content discovery easier, then that would help.

Q: In what way?

A: Content discovery for many consumers is still easiest when they can find content directly embedded on their handsets. Some carriers have done a good job here. Vodafone Group and a couple of others have worked to get embedded, pre-loaded content on handsets.

So, there is a role for mobile operators to play. But I don’t think they have a role to play in building app stores and managing content directly. I think that they need to leave to others.

Q: What revenue share models work? There is the Apple model, which cuts out the carrier, and then there is GetJar, where you sell content but don’t monetize it – yet.

A: There are a lot of models. In the case of GetJar, we make money through our pay-per download systems. Basically, developers are paying us and the content is given free to consumers. A major project for us in the next 12 months is to launch payments. Do we keep the revenue? Or do we share with a carrier partner? Or can we give a 100-percent share back to developers and charge them for top-notch placement in our app store? In that scenario we clearly make a lot more money on merchandising and retailing apps than we will from the actual sale. So, the short answer to the question is: there are many different monetization models out there and it’s going to take some time to play out in terms of which one is going to be successful.

THE NETSIZE GUIDE

The Netsize Guide – which features exclusive interviews with 28 industry senior executives at leading companies and organizations including Havas, M&S, MMA, Nokia NAVTEQ, PayPal and Sony Music Entertainment — provides unique perspectives and reveals how players across the mobile ecosystem are preparing to meet the challenges and take advantage of the opportunities ahead.

The Netsize Guide 2010 also includes the results of Mobile Trends Survey 2010, an online survey asking +1,000 mobile professionals and practitioners across 67 countries their views on these key themes and their insights into trends that top the industry agenda, including the advance of mobile applications stores, progress towards global mobile commerce and the increasing importance of mobile across a range of business verticals.
Finally, the Netsize Guide 2010 presents detailed data on the wireless telecoms sector in 41 countries, including revenues, market shares and value-added service offerings for messaging and billing of 194 mobile network operators worldwide.

DOWNLOAD YOUR FREE NETSIZE GUIDE HERE.

Disclaimer: Netsize is an MSG supporter and client. Peggy Anne Salz is author of the Netsize Guide 2010.

Tags: Android, app store, Apple, GetJar, Google, iPhone, mobile analytics, Mobile Internet, Netsize, Netsize Guide 2009, Netsize Mobile Trends Survey

This entry was posted on Wednesday, May 26th, 2010 at 5:28 pm and is filed under Briefing Rooms, Content Discovery, Featured, Mobile Research, Netsize. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.