Francisco Kattan

Insights on the Mobile Ecosystem

BlackBerry App World – An App Store Wannabe?

Unlike the poor attempts thus far to launch a device that truly rivals the iPhone, the battle of the app stores is proving to be much more competitive and will require responses from Apple to maintain it’s advantage. Already Nokia announced plans to improve on the App Store with by leveraging location and the social graph to discover more relevant applications. Now RIM has raised the bar in a number of key areas as well. All this while operators sit on the sidelines watching the app opportunity slowly move away from their own walled gardens to OEM branded stores.


By now most of you have either read about the Blackberry App World or tried it on your handsets (for more details on the App World announcement, check out Mobile Crunch and  Business Week). So rather than describing the App World, I want to share my observations on the launch, including highlighting a few areas where I believe the App World is raising the bar on Apple. While still fresh in my mind (on the plane from CTIA/Las Vegas), here we go:

  • 80% Share. As previously announced RIM shares 80% of revenues with developers, raising the bar on Apple. It’s what you have to do when you are behind in terms of building a developer community. Although RIM has had a developer community for some time, it never provided adequate distribution opening the door for Apple to quickly attract a thriving community. Advantage RIM.
  • $2.99 Minimum. While RIM may position the $2.99 minimum price for premium applications as a way to prevent lower quality apps from the store (compared to $0.99 for Apple), the real reason for this is simple: RIM has higher costs. RIM’s breakeven point mandates a $2.99 minimum. RIM costs include payment processing, operator kickbacks, and hosting expenses. Advantage Apple.
  • Upgrade Pricing. RIM enables developers to charge for their upgrades. This gives developers the flexibility to deploy free upgrades (bug fixes, for example) and premium upgrades (major new versions). Apple on the other hand requires developers to post upgrades at no cost to consumers limiting the incentive to improve applications. Advantage RIM.
  • Paypal required. RIM requires users to use Paypal for payment, adding unnecessary friction to the buying process. Watch for operator and credit card billing to follow. Given RIM’s good relationships with the operators I expect they will be able to negotiate operator billing and still maintain the 80% share for developers. As it relates to payments, watch for Nokia to pursue developing its own billing relationship for the Ovi store as hinted by it’s recent investment in Obopay. Advantage Apple.
  • Free Trials. RIM enabled developers to make a full version of their apps available at no cost for a limited trial period. This enables developers to showcase their applications without having to created limited/demo versions of their applications. This will also encourage consumers to try unbranded, longer tail applications. Advantage RIM.

What do you think?  How would you rate RIM’s response to the Apple App Store?  Leave a comment and participate in the poll below.


Advertisements

Written by Francisco Kattan

April 4, 2009 at 6:17 pm

9 Responses

Subscribe to comments with RSS.

  1. Good observations.. friction’s definitely the operative word here. They’ll never achieve the volume or visibility of App Store, but so what. They’re fundamentally enterprise and telco centric. The PayPal angle is indeed strange – more like a stop gap.

    By the way be sure to keep an eye on the jailbroken app store effort by Cydia’s author.. He’s done some really cool stuff to show what an open app store could look like.

    http://online.wsj.com/article/SB123629876097346481.html

    Brad Nicholas

    April 5, 2009 at 2:54 pm

    • Thanks Brad for dropping by and sharing the news on the Apple renegade stores. There is clearly developer discontent with Apple’s restrictions and the lack of transparency regarding the onboarding process. This may work for Apple while its the only game in town. But with Cydia, App World, and Ovi opening their doors, developers will have other choices.

      Looks like Apple is getting ready for a legal fight. In case you did not see the news from Friday, Apple just updated it’s developer license agreement to ban developers from these practices. Check out the news here.

      franciscokattan

      April 5, 2009 at 9:53 pm

  2. While I am glad to see better Dev environments. The developer is still left with having to develop for multiple platforms. At least with blackberry and OVI you should be able to certify for many devices at once.

    Rob marchi

    April 6, 2009 at 9:20 am

    • You are right Rob. Just when we thought fragmentation for developers was the biggest issue, it is getting worse, not better. Palm Pre, iPhone, RIM, Symbian, Windows, Android, BREW… each with their own SDK.

      This is an area ripe for collaboration and innovation. A number of efforts have been launched already, including:

      BONDI led by the OTMP folks. They are working to create a common set of APIs to access device capabilities securely.
      — Adobe’s Open Screen Project aiming to have Flash and AIR as the common platform.
      — Just last week at CTIA Verizon, Vodafone, Softbank and China Unicom announced the Joint Innovation Lab (JIL) that aims to create a single platform for creating mobile widgets.
      GSMA OneAPI was announced in Barcelona at the Mobile World Congress. This one is a little different as it is focused on Operator APIs, not device APIs. It would enable developers to access network assets (presence, location, messaging, charging, etc.) using a common API across operators. It is led by Aepona and promoted by the GSMA.

      Either way, developers will have to live with a highly fragmented landscape for at least the next 3 years. In the mean time, there is an opportunity to innovate in new tools to simplify the problem. Adobe did a nice job for Flash developers with Adobe Device Central, for example. And just last month Eclipse announced Pulsar, an initiative aimed at delivering common tools across platforms. Pulsar is supported by Nokia, Motorola, RIM, Sony Ericsson, and IBM.

      From experience we know that not all of these initiatives will gain traction. But it’s certainly an opportunity for industry players to be perceived as solving the problem and gain at least a marketing advantage.

      franciscokattan

      April 6, 2009 at 12:08 pm

  3. The biggest problem I think for the app world is differentiating itself from the app store, which I think would be best by pandering to the business users. I know a lot of folks who prefer a BB to an iphone simply because it’s more convenient to work for business use. The app store is overflowing with less-than-useful apps, but the BB app world, relatively unpopulated as it is, has a good chance to screen the garbage out and pick out the best apps. Even free alternatives like the taxi hailing thing taxi magic or worldmate (I dunno if that one’s on the iphone too though) appeal to biz users a lot.

    mikata

    April 8, 2009 at 8:50 pm

    • Hello Mikata, thank you for dropping by. Agree that with so many stores competing for developers, differentiation is key. As you say Blackberry is better positioned for business users. However, I think even Steve Jobs was surprised at the iPhone’s appeal in the enterprise. So much so, that Apple had to squeeze in support Exchange and VPN in Release 2, a release that was focused on the SDK and the App Store (which incidentally began the App Store wars).

      Apple is now pushing hard on the enterprise, making it more urgent for RIM (and Palm) to respond – as they have.

      franciscokattan

      April 25, 2009 at 2:39 pm

  4. Hi Francisco. Just found out your blog through LinkedIn. Nice.

    I would just add that Apple has the big advantage of providing to developers a single hardware platform with a limited number of released OS versions. This helps increasing the developer margin. BB and OVI in theory allow you to certify for many devices at once, but the reality is that the form factor (like touchscreen or not) and the variety of OS versions increase the development costs (as a matter of fact many BB apps are not yet available for the Storm, simply because the UI design and interactions need to be rewritten). So the question for RIM will be whether the 80% share and the higher app price range will compensate the effort of dealing with different hardware platforms to attract enough developers.

    Stephane Honore

    April 24, 2009 at 2:37 am

    • Hey Stephane – good to hear from you. I think you are right – Apple has the advantage of having a single device, so there is no fragmentation for developers by definition. It will be interesting to see how Apple deals with this issue as new iPhone models will surely be introduced. There is always a trade-off between innovation and backwards compatibility. As Apple introduces new models, developers will have to deal with the increased fragmentation (different screen sizes, at least). The theory is that new models will enable the iPhone to penetrate new market segments, and this should be helpful to developers in the end.

      Regarding whether the 80% RIM rev share to developers (versus 70% share for Apple) compensates for the extra cost of dealing with different models, I think probably not as you suggested. But more importantly than the extra work is the difference in transaction volume. I attended a Getjar developer reception this past week and a developer told me that he thinks he can make up the difference in volume. In other words, developers are much happier with a 70% share if the iPhone App Store will deliver a much higher level of purchases than the BlackBerry App World, which at this point appears to be the case.

      franciscokattan

      April 25, 2009 at 3:00 pm

  5. […] 2 years since its launch, RIM’s App World contains a meager 20K apps, compared to several hundred thousand for iOS and […]


Comments are closed.