Application stores, where one can download software applications like games, productivity tools, or even shopping platforms, are set to become the next big thing in the telecom sector. This facility offered by telecom service providers is also expected to shore up their margins.
The tariff war in the industry has already eaten into the margins. So, the attention would be on increasing value-added services (VAS) to get better results. The telecom industry, therefore, is betting big on application stores as one of the major sources to enhance their margins.
An application store, better known as app store, is a one-stop shop for mobile phone that allows one to download software applications like a sophisticated music player, a word-check, an advanced calculator or tracking software. These services are available for a charge or even for free.
Most of the players would be looking to the Apple app store model, which has been a huge success. Till mid January, there were at least 1.33 lakh third-party applications available on Apple app stores with a total downloads of over three billion.
Bharti Airtel has already gone live with its application store, whereas, companies like Reliance Communication (RComm) and Aircel are yet to join the race.
VAS is now being seen as the cushion to impact the fall in profit margins, say analysts. ?Till now, games embedded on to cell phones have been the only application to which subscribers have hooked on to. An application store, therefore, is a good way to boost Internet usage and make VAS to contribute about 20% to revenues,? said Romal Shetty, head, research, KPMG.
According to Gartner, consumers will spend $6.2 billion (approximately Rs 27,900 crore) in 2010 in mobile application stores worldwide. As per analysts, mobile application stores will exceed 4.5 billion downloads in 2010, eight out of ten of which will be free to end users. ?The application store is the future for the telecom industry. Application store by itself has never been popular, but accompanied by a hi-end handset and a great network, it can work wonders for the operator,? said Krishna Durbha, head, VAS, mobile data and content services, RComm.
While Airtel will host around 1,250 applications , RComm will provide 3,500 on their application stores. ?Offering local and regional apps, Airtel will add the cost for these applications to customers? mobile bill or will deduct it from the available talk-time,? said Raghunath Mandava, CMO, mobile services, Bharti Airtel.
Currently, the application store is on a WAP portal where the applications are downloaded from. Airtel will shortly release a downloadable client of its application store.
According to the Cellular Operators Assosiation of India, VAS market, which constitutes about 9-10% of the total revenues for telecom operators at present, will contribute up to 20% of the total telecom revenue, and by 2010, revenue from VAS will touch around Rs 45,000 crore.
