In brief:

The avalanche of apps and app stores (nearly 70, according to WIP Connector) turns up the pressure on developers and other ecosystem parties to find ways to make money selling apps. How are apps discovered and promoted? And more importantly, how are these app emporiums and boutiques going to handle the simple CRM to encourage the all-important return purchase?

After all, it wasn’t so long ago that a study from Pinch Media, which analyzed over 30 million downloads from Apple’s App Store, reported that just 30 percent of people who buy an iPhone application actually use it the day after it was purchased. And the numbers plunge from there: after 20 days, less than 5 percent of those who downloaded an application are actively using it.

A lot of open questions. But one thing for certain: competitive differentiation is in the business model. And we know from the findings of a recent Netsize Mobile Trends Survey of +1,000 professionals and practitioners that the 4-Cs (Convenience, Compatibility, Choice and Charging) are key requirements for a winning app store (and so for the developers that hope to make a living selling their apps). Netsize is gearing up to release new (unpublished) survey results and a new report that reveals attitudes toward business models and what will enable real and significant app sales. Watch this space!

MAXIS, ONDEEGO & AMDOCS

What is the app store landscape and what are the monetization models?

This was also the topic at Mobile Web & Apps World Forum, a CTIA partner event organized by my esteemed colleague Ajit Jaokar. (Again, I congratulate Ajit on organizing a standing-room-only event dedicated to answering the tough questions around app fragmentation, monetization and how to make it all work. Thanks also for inviting me to speak during the SuperSession looking at mobile advertising and in-app opportunity moderated by mobile authority Chetan Sharma. It was an excellent session with Joe Lally from MTV Networks and Jerry Rocha from Nielsen and Gary Schwartz, CEO of Impact Mobile, and one that provides a great deal of material for future MSG analysis and follow-up.)

However, it was the session on personalization and content discovery, presented by Mike Lurye, Amdocs Interactive, Director of Product Marketing, that got people thinking about the business value of granular subscriber intelligence (anonymized) and ways it can be used to get consumers to the content they will appreciate and without making them search for it. To drive home the point Mike didn’t use marketing-speak. He used case studies from mobile operators in the U.S., Europe and Asia Pacific. (You can download all the speaker presentations here.)

I used the opportunity of our in-person meeting to discuss the larger issues around app store marketing and pick up on a fascinating conversation we had weeks earlier (in preparation for Mobile Monday Austria) delving into the tough choices facing developers.

Certainly, developers can jockey for position in the Apple App Store (and others), where getting featured (placed where people can find you easily) is the only way to build a business. But developers can also align themselves with retailers/operators that seek differentiation through innovative business models emphasizing customer service, easy discovery or local culture.

The latter works for Malaysian mobile operator Maxis. I am a great admirer of the carrier’s app store focus and mission: “to nurture and foster interesting developer applications for our community.” (This and more in this must-see video interview with Nava Wathan, Director 1Maxis, Maxis Communications.) Maxis has become the place to go for “something that is Malaysian.” Surely, many more mobile operators can pursue a similar strategy to stand out from the crowd (and build a successful business for their business ecosystems of developers and customers).

At the other end of the spectrum, Ondeego also “gets” it. It launched AppCentral, a mobile app store for the enterprise last fall becoming the first mobile application store meeting the unique needs of the enterprise workers and their IT departments. For enterprise employees a one-stop shop means that they can select what they need (serious apps) to do their job. For developers it means a channel to a difficult to access market and a chance to sell their productivity and enterprise apps direct to professionals who will likely buy.

PODCAST INTERVIEW WITH MIKE LURYE

First, credit where credit is due here. Although people have tweeted about the simplicity and originality of my views on the evolution of the app landscape and the marketing strategies that will help everyone make money, it was Mike who came up with the popular Supermarkets/Farmers Markets analogy.

I caught up with Mike in-person following the Web & Apps World Forum event to talk about marketplaces and ideal models for making money – now.

Here an excerpt:

APP STORES & STOREFRONTS: “The main difference between an app store and a traditional digital commerce storefront is actually not that it sells apps, but that it is based on a certain business model that’s been pioneered by Apple. Stores selling apps have been around for a very long time but Apple changed the game because they set up a business model that opened up the opportunity to get to market for a much broader range of developers and they did so by establishing very straightforward business terms that are the same for everybody.” But not all app stores must sell apps. China Mobile, for example, sells traditional digital merchandise (ringtones and wallpapers and so on) on the storefront they call their app store.

MAXIS MODEL: This mobile operator has cleverly defined the segment it will go after: the local population and local developers. “So, their store is never going to be very big, they acknowledge that. They are not trying to compete, they are trying to co-exist….This is a good strategy because when you know your customer and when you know what you want to offer to your customer that is valuable to them, and you know who is going to build it which is a local developer community, you are poised for success.”

FARMERS MARKETS: The close customer relationship is what makes a farmers market special. And mobile operators have a close customer relationship they can build on – if they recognize their real role. “The owner of the farmers’ market doesn’t get in between [the] transaction…There is a direct [customer] relationship and the owner of the farmers’ market acts as a facilitator. They make it work.” How? Through payment services, personalization insights and scale.

CALIFORNIA GOLD RUSH: If you are about to pack, think again because it may have peaked. Apple found gold in apps and now everybody is moving to California (literally). “Now, guess what, not everybody who came to California at the time of gold rush became rich, some people did, but most actually didn’t, so that is what is going on right now. Everybody and their brother wants to have an app store; some people have a well thought out strategy. Maxis is an example of that. Some people are doing essentially a ‘me-too’ kind of a thing, and there is actually nothing wrong with that in principle as long as you realize that that’s what you’re doing.”

WHITE LABEL: Mike says it’s a low-risk model. The not-so-good news: it’s unlikely to build subscriber loyalty. “There is no leverage of the operator’s unique capabilities, there is no more value for the subscriber to purchase an application in that app store versus the original app store from the white label supplier themselves. There might be some cost advantage…but fundamentally it’s not a model that will differentiate the operator.

TAKE A PAGE FROM AMAZON: Personalization has made Amazon a success. “This is the business they are in: the business of personalization. They are offering it now as a platform to others. You do that search, you bring results not only from Amazon, but [also] from Amazon’s competitors and that’s OK by Amazon because they build such a sophisticated platform that now empowers [the] ecosystem.
***
MY TAKE: Are we on the brink of new business models or is history repeating itself? And — even if it is very much a repeat of the mobile portals – what will guarantee success for the developers and retailers this time around? At the moment, developers have a handful of choices: boost word-of-mouth promotion (tough and tedious, which is why Mob4Hire’s peer app recommendation is an interesting one to watch), mobile advertising (complicated and unpredictable, which is why we are all searching for better ways to deliver the right advertising to the right demographic) and placement (tricky and transient, which is why GetJar has cleverly created a model where developers pay for shelf space). What role will personalization play (even in a pre-paid environment)? My ongoing research into recommenders brings me together with mobile operators already wringing value out of granular analytics to help people discover content they’ll likely appreciate. A prime example is Hong Kong’s CSL, an operator I showcase in my upcoming report, that has harnessed personalization to support My Net, its own (branded) mobile Internet service. Clearly, personalization is moving up the business agenda (as it should) because it’s a way mobile operators can generate revenues (helping people find and buy what they want) and stay in the game.

* * *

LISTEN TO THE PODCAST HERE: [13:00]

Disclaimer: Netsize is an MSG supporter. Amdocs is not an MSG supporter.  However, ChangingWorlds, a company acquired by Amdocs, has published a by-lined thought leadership column series on  MSG. Peggy Anne Salz has also spoken at invitation-only  thought leadership events organized by Amdocs for its operator clients.

What do developers really want/need in order to make apps and (ultimately) make money?

Why is this question key? Put simply, the companies that get this right will have insights to build the correct mix of capabilities to forge and support a tight-knit developer community, creating relationships that will allow them to take a central spot in the emerging apps value web (not chain – it’s not that kind of a game).

There are no easy answers, but the panels and discussions during the dev day confirm that developers — creative people who are interested in cash AND community – are likely to gravitate to platforms and app stores that help them cultivate and connect with their fans.

LITMUS LEARNINGS

I first started thinking this through during Mobile World Congress (MWC) and the no-holds barred session I moderated on OneAPI. The panel – made up of the architects behind this milestone move: Nauby Jacob, VP, Users Experience, Bell Canada; Larry Baziw, Director Next Generation Services Strategy, Rogers Wireless; SandipMuckerjee, VP of Business Strategy and Marketing, Alcatel Lucent; Shane Logan, Director, Services and Collaboration, Telus; and Al Snyder CEO, Aepona – examined what developers require and how/why operators and enablers can/must work together to deliver. The positive feedback has been overwhelming and I have reached out to each of the participants to participate in a follow-up roundtable podcast on MSG, so watch this space.

(By way of background, the GSMA launched the commercial pilot in Canada as part of its OneAPI initiative, working with Canada’s leading operators to demonstrate the viability and benefits of providing developers standardized APIs for mobile networks. The pilot in Canada – the topic of my MWC panel – represents the first time developers are able to gain commercial access to the network assets of multiple operators from a single gateway. )

But it was the opening presentation by Paul Golding – pioneer, long-time thought leader in the mobile applications space and, more recently, a consultant to O2 Telefonica — that challenged everything we (think) we know about developers.

When Paul took the podium and showed the opening slide – where he had purposely crossed out the title of the planned presentation and replaced the words “Supporting Developers” with “EmPOWERING Developers” — it was clear that this was no marketing-speak. His message to us: Developers need feature-rich APIs and much, much more. (Indeed, Paul’s thinking on this topic left a deep and lasting impression, and I am pleased to report that Paul has agreed to join MSG’s roster of authors and contribute a guest column that builds on his simple, elegant and path-breaking ideas.)

In his presentation (here on SlideShare) Paul introduces three kinds of “power” that interest/attract developers most.

CONNECTED POWER is all about the APIs and platforms that allow developers to reach customers; CASH POWER is all about the APIs and platforms that allow developers to earn money (directly or indirectly); and COOL POWER is all about the APIs and platforms that allow developers to do something cool and interesting (translated: innovate).

Sure, it’s about technology (CASH POWER). But it’s also about harnessing everything we know from the business books about encouraging and channeling creative energy to cultivate developer communities that make great apps to delight the customer (CONNECTED POWER).

And – with a nod to Eric von Hippel, my favorite interview, author of Democratizing Innovation and THE authority on innovation – it’s about connecting developers with their lead users — the users who have a high incentive to solve a problem and the ability to innovate (COOL POWER). Combine all that (translated: enable all that) and it can yield a developer community and a selection of apps that can truly set the bar.

As Paul pointed out: O2 Litmus has recruited 7,000+ O2 UK customers and then helped developer connect with them to gain insights and – interestingly – lay the groundwork for a kind of app developer fan club that provides developers important feedback and critical buzz. (After all, fans will share their picks of favorite apps and cool developers with others – creating the same kind of virtuous cycle than can catapult local bands to rock heroes.)

Paul has an even better idea: Operators can help the process by simply putting fans in touch with developers. “Add some other cool brands to the mix and then let things happen.”

At this juncture, I am also reminded of Mob4Hire and the traction it has gained for its awesome concept which combines crowd sourcing with app testing. It’s a super-sharp business model that Paul Poutanen, Mob4Hire President and Founder, tells me he is expanding to allow people testing the apps to rank/share the ones they like most with everyone else. A great grassroots way to help apps get discovered and gain mindshare. More about this in an exclusive interview with Paul later this month.

The takeaway here: helping developers connect with people (fans) is emerging as key requirement of app stores and platforms.

NOKIA DEV DAY

When Mobile Monday Austria reached out to me to speak at its event over the weekend, one that also allowed me access to developers and other people who love mobile, I was thrilled. It offered me an important opportunity to sanity-check some of Paul’s key messages and test a few of my own ideas about the future of app marketing.

Cool Power: Yes, it matters – a lot! An informal poll of developers yielded a welcome confirmation of the qualities platforms/app store providers must have beyond awesome, rich-feature APIs. Put simply, developers require “partners” that help them create apps and generate revenues. And they will align themselves (eagerly) with those companies that make a conscious effort to help them connect with customers, cultivate fans and allow them to feel that they have made a contribution that matters in the scheme of things. For some developers, a functioning feedback loop tops the list. For others, being able to believe that the platform provider really listens, absorbs, respects and internalizes constructive criticism is paramount.

This came across loud and clear when naxxatoe, a developer in the audience, took the microphone to tell Nokia execs what should be at the top of their Ovi agenda. “It’s about connecting people,” he said, unaware of the play on Nokia’s own motto (Connecting People).

Kudos to naxxatoe for saying what had to be said and my respect goes to Jure Sustersic, Forum Nokia Biz Dev Manager EMEA, for seeking out naxxatoe and other developers between sessions to hear them out on what they loved – and hated – about Ovi. (Inspired by this exchange I have decided to produce an informal series of podcasts to give these developers a voice. My sincere thanks to naxxatoe for challenging me to think and see things very differently. I look forward to showcasing his ideas in the first in the series later this month.)

SUPERMARKETS VS FARMERS MARKETS

Regular readers will know that I am a great believer in the individual. We will accept the content we want on our terms – and we are most likely to accept content (and mobile marketing/advertising can be considered a form of content) if it is in tune with our interests, passions and context. Mobile (an intensely personal device) allows us to communicate all of the above, allowing (with our permission!) content and services companies a way to connect the dots and provide us with stuff (content, services, apps, advertising and all things digital) we are likely to appreciate.

Obviously, there is little room in the scheme of things for one-site-fits all. In fact, our requirement (even demand) for stuff we want the way we want it sits at the core of the Long Tail. While Chris Anderson didn’t explore mobile in his milestone book, we have nonetheless witnessed the impact in mobile. It began with an avalanche of content and then a plethora of portals where we could find it. (Well – content discovery and search is another issue altogether…)

Fast forward and we are witnessing the emergence of a Long Tail of app stores.

My Mobile Monday presentation (which included the findings of the recent Netsize Mobile Trends Survey) explored the evidence for this mega-trend and why this could be good news for developers. For one it means more choice for us (a key requirement for a successful app store, according to the Netsize survey). But it also means more choice for the developers, many of whom told me they are actively seeking alternatives to the Apple app store where they have to beg for shelf space (so that their app might be accepted/included) and then pray for promotion (so that their app might be featured where people can find and buy it).

With 25+ app stores and counting we can’t say we have a Long Tail. But there are more options then ever before. Want an enterprise app? A good chance you might find it at Ondeego. How about a porn app? MiKandi is a good bet. And the list goes on…

With these observations (and in preparation for my talk) I reached out to Mike Lurye, Director, Product Marketing Amdocs Interactive. After an invigorating brainstorm session we agreed that there will be many kinds of app stores, managed in many different ways.

There will be Supermarkets (app stores such as the Apple app store) where the provider gives suppliers shelf space, sets the prices and is pretty much focused on moving merchandise and making money. And there will be Farmers Markets (niche app stores and operator app stores – and combinations of the two) where the relationship between the supplier (a farmer with fresh produce) and the customer (people who really appreciate the opportunity to buy organic) is what clinches the deal.

Surprisingly, it was this observation and the suggestion that there will be marketplaces that fit their needs that got the buzz. Developers took the microphone and told me they  would indeed want to sell their apps via a farmers market – if they could. Several even asked me how they could get into contact with a Long Tail app store.

And – thanks to Mike – I can point to a little known example that shows this approach is not only an ideal – it is also an ideal business model making money – now. (BTW, I am also pleased to report that Mike has also agreed to a podcast to explore the supermarket/farmers market analogy and much more! I’m scheduling the appointment as we speak, so check back regularly or follow us on Twitter.

MALAYSIA SHOWS THE WAY?

Malaysian mobile operator Maxis has an app store and a mission: “to nurture and foster interesting developer applications for our community.” (An excerpt from this must-see video interview with Nava Wathan, Director 1Maxis, Maxis Communications.)

In Nava’s view, the operator app store is not impacted by handset app stores because consumers “will go both ways.” They will go to the Supermarkets (my wording) and they will also visit the Farmers Market. In the case of Maxis, the farmers market approach revolves around its sharp focus on local Malaysian apps “more relevant to the Malaysian consumer.” Thus, Maxis is the place to go for “something that is Malaysian.”

But it’s not just about enabling choice; the operator benefits from enabling payment. Maxis has opened up billing APIs for micropayments in apps and is looking to do the same for location, P2P sharing and advertising (allowing the developer to pull an add from Maxis instead of talking to ad agencies around Malaysia).Finally Nava sees that his company can also play a key role in connecting its developers with markets outside Malaysia. Put another way, Maxis can expand the reach of local developers by “surfacing our apps from our local developer community” on app stores run by the handset makers.

My take: As my upcoming series of podcasts will show, developers want to make money but they also demand a feedback channel that will allow them to consistently create better apps for their fans/customers. (After all, recurring revenues are the key to real and sustainable business). They also want some more say in how their apps are marketed and assurances that the app store/platform provider that they – like a farmers market – will do what they can to help developers build and nurture the relationships they need to innovate and – ultimately – succeed. One-off sales or fan following? Developers appear to want the latter. It’s now up to the providers to decide what they want to be (supermarkets or farmers markets) and execute. I know that Nokia has taken careful note of developer’s gripes and suggestions during the event and I will reach out to Nokia soon for their thoughts.

***

My personal thanks to the organizers of this excellent event — Aleksandra Schmid and Philipp Nagele (Mobile Monday Austria) and Mark A.M. Kramer. It was a great idea to link a mobile developer event with a Mobile Monday. It has exposed me to new ideas and allowed me to make some new friends. Warmest regards to naxxatoe and to the other developers who connected with me to share their platform likes/dislikes, and to Dave Dempsey from Radio FM4, who moderated the event and brought some valuable views into the discussion. If ever someone has the interest and empathy to bridge the divide between developers and everyone one else it’s Dave. I hope someone reaches out to him to do just that…I’m sure the results would rock!

While MSG prepares to unveil a string of new projects and media solutions for our growing roster of clients, I am wrapping up my own presentations for two exciting industry events. First on the agenda: a half-day session on Tuesday (September 29th) with Deutsche Telekom executives to discuss the challenges and opportunities of converged services and the implications this has for the consumer portal experience.

My contribution to this exclusive thought leadership event, organized by Amdocs Interactive, will look at the trend to hyper-connectedness and our increasing requirements for personalized and relevant content experiences.

I will be joined by esteemed friend and colleague Andreas Constantinou, Research Director of VisionMobile, a market analysis and strategic advisory firm. Andreas’ thoughts on the new mobile services and applications value chain – and the impact of the likes of Google, Nokia and Apple – is beyond thought-provoking.

I look forward to capturing his ideas in the opening chapter of  the Netsize Guide 2010, the must-read mobile industry almanac I write (for the third consecutive year!) on behalf of Netsize, a mobile commerce and communications enabler. More details on the Guide in future posts. In the meantime, I encourage companies across the ecosystems to contact me directly with case studies and great ideas.

After that it’s off to Edinburgh to speak at the 2009 118tracker Information Innovation Conference & Awards aboard the Royal Yacht Britannia. Where is the value in location? My presentation — the outcome of a new collaboration with Matthew Snyder, Founder & CEO of ADObjects, a strategic cross-media consultancy – offers some surprising answers.

We also draw from some exciting new services (such as AmbiSense’s innovative destination guide solutions for mobile phones, GeoVector’s new directional search and pointing app and Colibria’s Network Address Book, an offer that builds on our increasing interest in context-aware social address books – a requirement that sits at the core of Vodafone’s path-breaking  360 offer. A special highlight of the presentation: Mobile advertising innovation and vision from Russell Buckley, esteemed colleague and AdMob Vice President, Global Alliances.

If you can’t make the events, be sure to check back for in-depth analysis of the companies and services I mentioned. A special thanks to Anthony Stiso at DEUSA Enterprises LLC, who heads up communications  for GeoVector, and Cristina Whittington, Colibria Account Manager at Nelson Bostock Communications, for their prompt attention to my briefing requests.

Reminder: If you want to catch-up or meet-up, then contact me at peggy@msearchgroove or DM me @peggyanne.

In brief: In line with MSearchGroove’s ongoing and in-depth look at smart toolbars, personalized portals and the players that set the bar for these technologies, regular columnist and contributor Jim Levey shows a robust economic system (and new content distribution model) is emerging with personalization at its core.

These portals have developed large online communities by empowering users with self-service tools that enable them to create their own personalized homepages chock full of content that is dynamic, up-to-date and consistently relevant to their preferences.  This is achieved thanks to widgets that interoperate with specific applications such as search, weather, finance and social networks.

Fast forward and it’s the same model in mobile – although mobile markets in Europe and Asia have stolen the lead on North America (at least for now).

Why are operators outside the U.S. so far ahead in the delivery of content experiences that users appreciate? In my view, mobile operators, particularly in Europe, have embraced path-breaking personalization solutions that implicitly push relevant content to subscribers based on their browsing behavior. But their business objectives don’t stop at delivering a satisfactory mobile user experience (because it is personalized); they are further harnessing these solutions to deliver targeted advertising that potentially drives results.

Put the two together, (personalized mobile experiences and advertising messages targeted to users based on their content consumption), and you have the capabilities mix to satisfy users and – at the same time – create a sizeable market conditioned to accept relevant advertising. (And isn’t this exactly what brands have been waiting for?)

Put simply, by collecting and wielding terabytes of data, which reflect subscribers’ mobile Internet habits, operators can lay the groundwork for contextual ad serving.

The endgame is all about delivering users content they want and advertising they will appreciate. But these business benefits can come at a price. This mass customization requires network resources and bandwidth beyond what most operators anticipated or can afford. Clearly, users who can finally get the content they like are eager to explore the wealth of content and apps at their fingertips. This results in increased usage, challenging operators to think of new ways to generate new revenue streams (potentially to offset bandwidth costs or at least invest in network upgrades which will become a top priority if advertising on mobile becomes video-centric).

WHO FOOTS THE BILL?

Against this backdrop, the big question becomes: Who is going to pay for it all? Some mobile operators are betting on differentiated pricing and data plans (which require users the foot the bill) to solve this problem. However, this is hardly a long-term sustainable model in an age where free is the norm. Ad-supported content and business models are the way forward.

The real money is with the brands.  But, as we all know, brands are sitting on the sidelines waiting for the mobile industry to provide reach, standards, accountability and access to customer data. High marks to U.K. mobile operators who are trying to achieve this with the GSMA, but it’s a work in progress and it’s not clear if brands can wait.

So, why are operators slow to get onboard and get thinking about ad-funded models?

It’s clear: Operators are caught between a rock and a hard place. On one hand, they are sitting on stockpiles of data that can power personalization and ad serving engines.  On the other hand, while operators know brands would like to get their hands on this data, they also know their subscribers trust them to act responsibly with their personal information. Indeed, the blogosphere tells us some people are even spooked by personally relevant content and advertising. (Interestingly, many more reports show consumers see huge value in receiving content such as coupons and vouchers relevant to their location or intent to buy.)

Naturally, some mobile operators have responded to this with a wait-and-see strategy. Others, however, have turned a problem into an opportunity, using personalization solutions that anonymize customer data, to develop sharper segmentation and deliver mobile content experiences that set the bar.

These solutions make sense because they encourage subscribers to browse the mobile Internet freely, while at the same time anchoring them to their operator’s portal start page because the experience (in tune with their lifestyles) is so good. Beyond this, some personalization solutions harness widgets (in the form of a widget toolbar, for example) to enhance this experience by delivering fresh content to the handset and take the tedium out of navigating the mobile Internet.

MARKET PERSPECTIVE

What is the value proposition and how has the market reacted? I recently caught up with Joel Brand, Product Manager at Bytemobile — a provider of network-based service delivery platforms that enable the delivery of value-added servcies –  to get his perspective on this next mega-trend.

The way Joel sees it, mobile content personalization is “a subtle approach to marketing.” Subtle here means a trust-based give and take.

From the get-go this conversation – which we recall is based on a deep understanding of behavior and personal preferences/tastes — is a rewarding exchange that respects the individual and further rewards them with a fulfilling mobile experience that is perfectly in tune with their lifestyles.
As a result, the line between content and advertising blurs and the individual welcomes both because there is no noticeable difference. Both are relevant, useful and enriching. With this the groundwork is laid for an ongoing brand dialogue that can continue at other times and in other sessions. Quid pro quo.

What is the user experience when content and advertising combine? Joel offers this. “If a subscriber is browsing mobile travel sites [then] the system may push content from Expedia or Club Med.” Similarly, , if the user purchases South African jazz ringtones, the system can work with a third-party ad network to serve a marketing message about FreshlyGround, a hot band from South Africa. The possibilities are limitless because it’s tailored to each individual.

Put another way, the goal is to blend content with marketing messages in a non-intrusive fashion. The content is informative; the advertising is informative and the message is welcomed.  Advertising works best when it is subtle.

AMDOCS INTERACTIVE

Another significant player in the mobile Internet personalization space is Amdocs Interactive ChangingWorlds. The company’s solution, which is deployed in 56 top-tier mobile operators worldwide, harnesses advanced algorithms to analyze individual browsing behavior in real time and push relevant content into the portal.

I got together with Mike Lurye, Product Marketing Manager at Amdocs Interactive, to get his take on where this is going. As Mike puts it, it’s all about personalization, “but the value is in user choice.” The Amdocs approach lets users make the decisions, providing them the option to actively configure content requirements. But the system also makes decisions for the user, choosing which content to push dynamically based on the subscriber’s browsing behavior.

In practice, Amdocs Interactive features a smart icon-driven toolbar which supports more intuitive navigation and links to third-party content and services including social networks, ecommerce, search and news. All can be launched from the operator’s portal, but the experience doesn’t end there. The toolbar remains in the browser and travels with the user as they engage with these services.  As Mike puts it: “All this intelligence is logged, analyzed and optimized for a personal portal experience.”

With both Bytemobile and Amdocs Interactive, the marketing approach is subtle and the chances of success greater. This is because subscribers are in control and therefore comfortable about making personalization choices, either through configuring the widget toolbar that travels with them everywhere or by letting marketers/operators know what they like.

ROBUST ECOSYSTEM

Connect the dots, and the pieces are in place for a sustainable economic model that fosters the growth of the entire ecosystem. Why? Because aggregated and anonymous browsing behavior provides the data essential to the creation of well-defined profiles that, in turn, pave the way for brands to deliver subscribers an offer they literally can hardly refuse.

Marketers benefit because these personalization solutions provide the much-needed basis for an effective ad-supported content distribution model. The insights they provide into individual browsing behavior combined with other data points provide a consolidated view of the customer. And, as we know, delight the customer is the first rule of successful marketing.

Personalization pays for operators as well. In fact, Mike tells me one of his company’s operator customers saw as much as 20 percent uplift in revenues. It’s difficult to say whether the revenue boost was due to increased data usage, more premium content consumption, upgrades to richer subscription plans or more beneficial revenue share agreements with third-party ad networks – since the solution impacts each of these – but it’s clear that personalization had an impressive incremental effect. The same solution potentially improves mobile search, resulting in a more personal (hence useful) user experience.

And finally, it’s good news for the publishers as well – provided they forge relationships with the clever operators that have embraced these personalization solutions in the first place. By negotiating licensing and rev share agreements with these operators – ones that are willing to stream subscriber intelligence to the publisher ad servers – these publishers have the capabilities to extend the personalized marketing experience that subscribers have come to expect. No longer in the dark about their users profiles and preferences,  these publishers have the business and customer intelligence the need to serve relevant ads and sell premium inventory aimed at a high CPM audience.

THE BOTTOM LINE

While the mobile ecosystem seeks a silver bullet solution that will get brands to open their wallets and increase mobile advertising spend, some companies are growing the market by focusing on the user side of the equation. Companies like Amdocs Interactive and Bytemobile are sharply focused on the connection between personalized content, relevant marketing and personalized search. Together the companies count an installed base of more than 100 mobile operators worldwide. Do the math and those  implementations translate into tens of millions of subscribers who already enjoy a personalized portal with widgets that travel, and would likely be open to marketing messages that match their interests.

Personalized advertising is not science fiction.  It’s happening now because it must. The advent of 4G and LTE pushes operators to pursue new revenue streams to offset capital expenditures. Operators will therefore need to leverage subscriber intelligence, invest in personalization solutions and so take the lead in building an ad-supported content distribution model that works for everyone. This will surely spark interest among the marketers currently sitting on the sidelines and get the attention of the brands.

The bottom line: It’s encouraging to see traction for this particular approach to mobile search. Peggy adds: The question remains: Will mobile-only search, which essentially promotes a subset of wealth of content/apps/stuff out there, continue to flourish? Or will it be Web search scenarios, enabled by the usual list of suspects all over again. I have some positive views on the potential of social search in mobile, and share these via podcasts (such as this one) and my contributions to mobile search white papers.

And while we mull over the prospects for mobile search, I invite you to consider the graph below from StatCounter Global Stats (based on aggregate data collected by StatCounter on a sample exceeding 4 billion pageviews per month collected from across the StatCounter network of more than 3 million websites) showing the companies that lead in online search . Charles Knight – my esteemed colleague and the “voice of alternative search” at MSG partner site AltSearchEngines - has launched a contest and asks: What is the one word that best describes Google’s lead? (Google is the read line at the top.) “Alarming” is my pick…

Since AltSearchEngines doesn’t focus on mobile search (which is why we have partnered), allow me to share the StatCounter Global Stat chart for mobile search, and likewise ask your views. Why does Google lead the pack? (Particularly when the mobile experience offered by Google is known to be unsatisfactory…) What do YOU think?

***

OPERA BROWSER EDGES OUT iPHONE IN MAY, according to Web-analytics firm StatCounter.  The Norwegian browser firm Opera Software saw its mobile browser surpass the iPhone’s popularity last month. Based on aggregate data findings on a sample of over 4 billion page views per month, the study said 24.6 percent of Internet pages downloaded to mobile devices went through Opera’s mobile browser, and 22.3 percent through the iPhone. Source

The bottom line: Although Opera would likely have lost out if the iPod Touch had been counted, these figures are still significant. It can also be read as an indicator of BlackBerry’s mobile Internet dominance.  The American smartphone is widely perceived as THE corporate device, so while Internet appetite might wane after some time for the casual user, maybe it’s BlackBerry’s leagues of loyal prosumers that keep Opera that little bit ahead of iPhone.

***

MOBILE ADVERTISING IS EXPECTED TO BE WORTH $5.7 billion by 2014, according to Juniper Research. The report says a need for customer engagement and a quantifiable return on investment will drive growth in mobile advertising, but brands are still doubtful that “mobile has sufficient reach to warrant substantive ad spend.” 

Mobile will still account for only 1.5 percent of total global ad spend by 2014. Jupiter points out that, although this year will see the mobile Internet become the most popular delivery channel for advertisers, CPCs and CPMs have fallen sharply over the past year.  But there is a bright side: Response rates in mobile advertising remain substantially higher than those in other media. Source

The bottom line: A mix of good and bad news on mobile advertising from Juniper, and another voice supporting changes many in the industry agree are critical:  More engaging mobile advertising campaigns and agreement on key performance indicators and measurement tools. Let’s hope Juniper’s advertising spend proportions are a just a miserly prediction.  Peggy adds: After all, word is – and this was expressed at this week’s Mobile Marketing Association (MMA) event in NYC – that the industry is only waiting for a few solid success stories to drive significant ad spend. More on the mood/news at the MMA event in a special report from Jim Levey, a former mobile advertising executive at Amdocs, whom I am proud to report has joined our roster of authors and correspondents. Jim will be tracking and commenting on mobile advertising industry developments that matter.

***

AVERAGE MOBILE MARKETING BUDGETS WILL INCREASE 26 PERCENT this year, even as overall marketing expenditures decline by 7 percent, according to new Mobile Marketing Association (MMA) research presented at its New York conference. 

But although mobile is fighting against the downward momentum of spending, at 1.8 percent it still only makes up a small fraction of total marketing budgets. The MMA projects that mobile ad spending will grow from $1.7 billion this year to $2.16 billion in 2010.  MMA says SMS campaigns remain the most common at 66 percent, followed by having a mobile Web (53 percent), and mobile email marketing (33 percent). Source

The bottom line:  This research puts a more positive spin on the state of the market (as opposed to Juniper’s rather sobering report above). That mobile marketing spends are going up during a generally down time can only be encouraging.  However, the challenge must remain in convincing brands to dedicate a greater proportion of their budget to an exciting new medium, whether that’s through tried and trusted messaging campaigns, or using richer new mobile media.  Growth and innovative mobile development still needs risk-takers and brave allocation of budget from the big-name brands.

***

GLOBAL MOBILE VIDEO USERS WILL total more than 534 million by 2014, according to a forecast issued by Pyramid Research.  It says a strong percentage of mobile net additions will come from emerging markets. The study adds that mobile video subscribers will rise roughly 8.5 percent by 2014, citing the availability of improved devices and networks as the keys to driving adoption. The Asia Pacific market will lead the mobile video growth spurt, claiming 281 million subscriptions by 2014, and India will also experience a dramatic uptake. Source

The bottom line: Mobile video has only very recently begun to penetrate western markets, thanks to the improved user experience and larger screens available with the latest smartphones.  Although eastern markets are ahead of the game in this respect, and the projections largely focus on these geographies, the predictions still seem bold. The provision of adequate bandwidth and the development of LTE technologies will be critical for the global take-up of mobile video, whether it’s accessed via streaming, downloads, or by accessing the 3G Video Call channel.

***

NOKIA’S POPULARITY IS FADING FAST AMONGST TEENS reports online teen hangout, Habbo Hotel.  A survey asked 112,000 teenagers in 30 countries to choose their top cellphone brand, and just 21 percent of respondents chose Nokia, down from 29 percent last year. Source

The bottom line: The Habbo survey numbers are reported to have excluded key emerging markets (such as India and China, where Nokia is market leader), and may also have had a strong bias towards respondents from America, where Nokia’s market share is much less.  However, there’s probably some truth in the suggestion that Nokia could do with re-energizing their brand for the global youth market.

***

NEARLY 60 PERCENT OF U.S. MOBILE PHONE OWNERS TEXT, with 94 percent of teens the largest user group, and 20-somethings at 87 percent.  So say results from the second annual Vlingo Consumer Mobile Messaging Habits Report. Among those in their 40s, usage jumped from 56 percent in 2008 to 64 percent this year, and for those in their 50s it jumped from 38 percent to 46 percent. The report explains that texting is also gaining on sending/receiving calls as the primary use of mobile phones, with 35 percent of all respondents using their phones for texting more than for calls. Almost half of respondents do both in equal numbers.  Text message volumes have risen across all age groups, although the 13 to 19 age group remains the most active with an average of more than 500 texts per month.  It also claims that more than a quarter of mobile users drive while texting. Source

The bottom line: The rise of messaging in the U.S. appears undaunted in this report, with ever-climbing numbers not always reflecting responsible use of America’s favorite non-voice mobile communication channel.

Notice anyone missing? Service providers and mobile operators.

In fact, their absence in this line-up tells us these players are either content to leave it to the handset makers and Internet giants (a first step on a slippery slope to being a dumb pipe perhaps?), or are simply oblivious to the vast arsenal of capabilities at their disposal, capabilities such as customer relationship data, personalization technologies, and location information that allow them to fight back. In my view, if these players could open up to make all the above available to developers (in a standardized, no-brainer way), then they would cover the bases to be much more than just another application store. With their reach and resources, operators and service providers could be the super shopping malls of the mobile Internet.

Last week I explored this in a post that outlined how Qualcomm and its Plaza Mobile Internet platform potentially change all the rules, levelling the playing field and allowing operators and brands to play a central role in this brave new Open Web. This week I’m back with an exclusive look at Amdocs, a company preparing to take the wraps off an application store platform that ups the ante. Thanks to Jessica Francisco, Amdocs account manager at Weber Shandwick for reaching out, and thanks to Idan Carmeli, Business Development Manager, Amdocs Interactive, for giving MSG the inside track on the company’s app store strategy.

Idan’s controversial yet correct observation: Service providers must learn how to leverage third-party developers. “The biggest question that should be on operators’ minds is: How do I convince developers to use me and not any other of the app store channels that are available in the market?”

The answer: Operators must open up and offer their assets – their customer billing relationship, their customer information, their ability to deliver content personalized to customer segments, and their network capabilities – to developers. “Operators know how to sell content and bill for it. Now they have to be open to third-parties and give them the tools they need to sell to their customers.”

An excerpt of our Q&A:

Q: Some call the app store model the killer model. Google et al have app stores in place, what is the impact on off-portal?

A: It accelerates the move to off-portal, which isn’t good news for service providers. But there is another side to this. The increased interest of consumers in finding cool content and apps means it’s a good place for operators to be [in the middle of this exchange] if they can find ways to better monetize this marketplace.  We’re helping service providers create an environment – an ecosystem similar to what we’ve seen from Google and Apple – that leverages their [service provider's] unique assets to bring developers and application providers on board.

A: There is nothing written about your app store platform and offer at this time. What can you tell us about it?

Q: We will be formally launching this new solution [at WC 2009] next week in Barcelona, along with other Amdocs Interactive offerings. The app store is a platform that allows service providers to, on the one hand, provide tools for developer communities to create applications, and, on the other hand, gives them [developers] a channel to present these apps on the content store. So there are two sides: One, a commerce platform and all the enablers on top of the commerce platform that are derived from our acquisition of Qpass that allow developers to create, upload an application to an existing content store, define how much they want to sell it for, sign the contract with the service provider for the revenue share – the works. Two, the tools for developers to actually build applications that aren’t just generic applications because they can access service providers’ services, such as SMS, WAP access and location as well as other available customer information . The aim is to connect all this – in a convenient way — into developer toolkits that are provided by the service providers to the developers to help them build applications they can later sell through the [service provider's] app store channel.

Q: Does the application store come with apps to start? Or do you help service providers populate it with apps so they have something to sell from the get-go?

A; As part of Amdocs, we have our own framework in place for working with third parties in the mobile start-up arena and we have a framework for building relationships and creating a channel between the start-up community and the innovator community on behalf of our customers.  So, we can leverage these relationships and all these start-ups that are part of our program in order to populate an app store. It’s not the focus of our solution, but we can facilitate this.

Q: So you offer the nuts and bolts for an app store. But I also know that you have mobile search and personalization capabilities – through ChangingWorlds, for example – that could potentially make this a self-learning storefront…

A: Definitely. Our ultimate vision for everything we do in Amdocs Interactive is to bring to market solutions that leverage all our assets. So eventually we will want to embed relevant capabilities in our app store solution. For example, we recognize that personalizing the app store experience for the consumer is an important value-add for both the developer and the consumer as it solves the relevancy issue that’s causing real pains for third-party developers on other mobile platforms.

Q: In other words, developers might pay a premium to content providers for the ability to target individual consumers? What would the deal look like?

A: It would be the service provider saying to the developer ‘you have this app that certain consumers are more likely to appreciate than others, so let’s make a deal and I’ll make sure the apps consumers see are the ones most relevant. Something like that could be reflected as a premium in the revenue share model between the service provider and the application provider. But first service providers should get where they want to go, and that is being able to launch an app store as quickly as possible because nobody is waiting for them.

Q: A devil’s advocate question here: What is the USP of an app store run by a service provider? Apple and Google have a lot of mindshare already…

A: When opening up to third-parties, service providers  actually create an edge for themselves by creating an edge for their partners. Our app store is not just a content store, but  an end-to-end process and a set of tools for developers that allows them to offer apps to users in a way that they find compelling because they are personalized, or location-aware, or indicate presence, or simply build on the history of the consumer relationship because the developer has access to this data. That’s an edge Google can’t provide its developers.

Of course, the sharing of customer data would take place in a secure and controlled fashion because these are big issues. And let’s not forget reach. If I’m making a choice to develop something, say, for the Palm Pre platform, , I had to take into account it’s not that big a platform yet in terms of how many users are using that. But if I go to AT&T, I have a subscriber base of upwards of 70 million customers. This is scale the service provider needs to learn how to leverage and offer to third-party developers.

Q: Let’s talk about some business basics. What is the monetization model and where does mobile advertising fit in?

A: The basic monetization scheme is the revenue share from the download of the application.  On top of that the mobile operator can charge for the value-ads we identified, such as placement on the store, perhaps boosted by mobile advertising across the network, as well as access to personalization information. It’s easy to imagine a number of models. In one scenario, it’s an 80/20 split in favour of the developer for the basic upload and distribution through the store. But the operator could take 25 percent for better placement, or 30 percent for better personalization. Lots of business models are possible.

It all comes back to the core assets. Once service providers can make it easy for developers to do business with them, then there’s basically no one better placed than a mobile operator to monetize these apps. They know their customer base better than anyone, and that includes Facebook, Google and even Apple.

Q: What about the developer? What capabilities do you offer them to help monetize their apps? I could imagine top of the list would be mobile analytics and some visibility into sales and mobile advertising campaigns…

A: Definitely. In fact, in the very first concept mock-up that we developed for our product, the most prominent feature on the developer profile page – the page where the developer manages himself — is a dashboard of revenue and usage performance for his applications.  For us, this is an important piece of what the service provider needs to offer developers so they’ll come to their [service providers'] platform.

Q: What about mobile search? A gripe I hear is that people can’t find the apps they want. You have mobile search within Amdocs, are you going to use it to make shipping in your app store less of a chore?

A: Yes, search is absolutely part of our roadmap – that and our personalization capabilities will be part of the app store.  But there is more than that: Amdocs is also an established BSS player and systems integrator,  and we’re priming our solution to best leverage the differentiation potential of the customer data, the customer billing and the business intelligence that’s coming from the BSS.

Q: What about the marketing and the branding? Is it powered by Amdocs? And who gets the developers on board? Amdocs or the operators?

A: Good questions. I think we’re going to collaborate with our customers on this. In the case of making sure that everyone hears about their (service providers’] app platform, it’s ultimately going to be the responsibility of our customers to communicate the app store and why it’s a good proposition.

Q: A big picture question: Is it too late for mobile operators to join that app party? I mean we already have Apple, Google, all the big names…

A: We’re seeing increased interest from our customers because they realize they have to be in on this. They have to be on that train before it leaves the station.

Q: It hasn’t left already?

A: Everybody else is announcing app stores.  Any service provider that goes to the market now, it’s not going to be the first; it’s not going to be the second. But any service provider that enters the market now will need to offer an app store. It’s table stakes.

It’s all about the future of the mobile industry. It’s time [for service providers] to seriously bring partners into their business. That’s that bigger issue at play here. If you look at other examples, such as Amazon in the retail industry, it gets this. It’s a retailer with an online store. But with its Amazon Web Services offering, it’s suddenly become more than that. Now you can ask yourself: What does a retailer have to do with providing computing services to developers and application providers?  It’s only when you dig a little bit into that that you realize that if you want to make sure that your business keeps growing and expanding and capitalizing on 100 percent of the opportunities that you have, then you have to learn how to work with partners in the best way possible.

My take: I am reminded here of The Keystone Advantage: What the New Dynamics of Business Ecosystems Mean for Strategy, Innovation, and Sustainability, a must-read business book by Marco Iansiti, the David Sarnoff Professor of Business Administration at Harvard Business School. In it he points out that scale, once an expression of internal operational and innovative capabilities, is fast becoming a measure of external resources and reach. Put simply, size is about “exerting influence over vast networks of companies and managing assets you don’t own.” All the big names – Microsoft, Google, Nokia, eBay and Amazon – are giants because they pursue a kind of keystone strategy that not only aggressively furthers their own interests but also promotes their ecosystems’ overall health. They have become undisputed market leaders because they appreciated the positive impact their platforms could have on their business ecosystems – and took steps to help other businesses in their ecosystem achieve high performance. This in turn has paved the way for sustainable results over decades.

Mobile operators should borrow a page from this winning strategy and leverage the broad range of content and capabilities available in their business ecosystems to improve the end user experience. Concretely, mobile operators should create platforms in the form of services, tools, or technologies and allow other members of the mobile content and services ecosystem free access.

With companies such as Amdocs and Qualcomm lining up to do just this -in the case of Qualcomm, it’s initially more about widgets -  it’s clear that Google, Apple, Nokia, Samsung, Microsoft and Handango (RIM) could get some serious company. We don’t have implementations yet – but we do have platforms that cover the bases to help operators gain a competitive position in the center of this value Web (NOT chain – that’s old school thinking)…