Mobile carriers have dominated the mobile industry since the demand for mobile service rose in the end of 20th century. They establishes mobile infrastructure and provides essential voice and data services for handset users. The whole mobile ecosystem is built around these mobile operators. Handsets manufactured by OEMs have to bundle with carriers’ cell phone plans to enter into mobile market and these operators are also the main entry to access mobile services. They charge both users and application/service providers living on their mobile network and control the data or voice flowing through their gateway.
Apple breaks this by developing a new business model to bypass the control of mobile operators. It provides service, content, and application developers a new platform to directly deliver their works to end-users. In fact, this model is not a brand new idea. Qualcom has also developed a similar platform, Brew, for wireless application development and delivery services and gained quite success in this pioneer project. Apple duplicated the success in iPod story, by releasing an innovative and fantastic iPhone with built-in shopping software. Combing this software with Apple App Store, an online shopping store, users can buy music or wireless applications and payment directly goes to application developers and Apple. The complete business model, from hardware, software, online store, to payment, excludes carriers from playing and makes users stick in.
Mobile operators are traditionally essential mobile service providers and earn money from traffic flow. They used to dominate the mobile industry because they own mobile users and traffic. However, with the trend in the development of Internet and e-commerce, they know ISP model is limited in company growth. As a result, they also plan to become wireless application/service providers to create a new cash cow. However, Apple App Store proved that its innovative model could marginalize the control of mobile carriers. Thus now Nokia, Google, Microsoft, etc. follow this successful case to create their own application stores to alleviate the influence of carriers. If the situation goes on this way, mobile operators would gradually lose its dominance in mobile market.
For now, mobile operators remain the most powerful player in the mobile industry. They don’t completely lose in the war of mobile application store. They still hold the channel to distribute phones and basic mobile services. Every OEM needs to cooperate with them to sell handsets, even Apple iPhone. I am super interested in how the carriers will do to fight against the war in mobile application store. Will a brand new business model created by carriers integrate consumers, application/service developers, OEMs and carriers themselves to provide valuable mobile services? If this happens, what would the mobile world look like? I cannot wait to seeing what is next in the mobile industry.
seattlekungfoolery said
Absolutely good points Yu-chen, I for one am glad that the carriers are being shut out to a certain extent in the application front. They were given an opportunity with their various storefronts and were not able to do it well enough – or – maybe they were just not able to get a critical mass.