(By Preethi J & Nikhil Pahwa)

V Venkatesh, CEO (Karnataka Circle) for Bharti Airtel, speaking at a panel discussion on personalization, social networking and strategies for mobile services at Mobile India 2010, said that the company will launch an application store called App Center in February 2010. The mobile application store will feature around 850 applications.

This announcement comes shortly after another telecom operator, Aircel, announced plans to launch an application store powered by Infosys’ white labeled application Flypp. This is yet another another indication of a trend beginning in India of telcos launching application stores.

Things To Do; Challenges

One of our readers recently commented that application stores are the similar to operator decks. A couple of other things to keep in mind:

— How Is Access Provided: if it is hosted only on operator decks, then it would be similar to a WAP deck. In our opinion, that is the wrong strategy. The propensity for a consumer to visit an application store on a handset is more, as compared to just on a WAP deck. For telcos, it’s necessary that the service is available both on deck, and on handset.

It is still a challenge getting the application store on a handset, and enabling easy access. STAR something like an application based, app-store-like content showcase with Plus a couple of years ago, but despite significant publicity, it just didn’t gain traction. The other challenge is – will applications be accessible from the handset desktop or just via another application? What works for Apple and the Android is easy access from the desktop, and it drives consumption of more content.

— Who Is Provided Access? As a postpaid customer of Airtel, I struggle to access Airtel Live services, even when I do figure out how to access Airtel Live, I need to use their “Airtel Live” GPRS connection, not Mobile Office. Why shouldn’t billing work with both? Airtel thus loses out on potential revenue.

Thus, access to carrier decks is not pervasive, and focused more on prepaid customers, ignoring post-paid customers who contribute a significant amount to telco topline, and have the potential to contribute even more, particularly when it comes to applications. Thus, telcos need to target tech-savvy, post-paid users, whose phones are more likely to support mobile applications, and not just go after the pre-paid user base.

— How is content discovery enabled: Even when I am able to figure out how to access Airtel Live, it’s a struggle navigating back and forth, looking for content. There is, as far as I remember, no intuitive content search. Frankly, discovery without great search, just doesn’t happen.

— How open will telcos be? The third key challenge is that of mindset: how flexible will telcos be to allow random fun applications (like iFart) on to their app store, and would they focus more on monetization than usage? Too much control will prevent unexpected cult hits, development of a fan base for apps.

Aircel told us that applications will have to be submitted to Infosys. The more the layers, the less the freedom. Also, would an operator try to promote more paid applications, or keep a specific ratio of free-paid applications? Transparency is key, and a developer needs the confidence that an application will not be rejected because of reasons other than incompatibility or “not in consonance with terms and conditions” in order to spend time, money and effort developing these applications. How will telcos react to applications that are advertising supported (and they get no share of the money)?

Our suggestion to telcos: just let go…focus on driving consumption, and monetization will follow. You’ll make money off data anyway. (Read: The Holy Grail Of Data Revenue Share)

Why Telco App Stores Have A Better Chance Than Those From Handset Manufacturers

In one word – billing. It’s the reason why the Mobile VAS industry in India exists, and it’s the reason why the direct to consumer business in the country just haven’t been able to monetize without telco partnerships. The mobile commerce ecosystem in India is still in its infancy, and billing relationships with carriers are essential for content to be monetized. Handset manufacturers will find it difficult to monetize app stores in India without telco billing.

Related:
Airtel’s Usage Survey For 2009: 200M Music Downloads
Aircel To Launch Mobile App Store With Infosys Next Quarter