Mobile operators can play role in app discovery

SINGAPORE--Service providers with their wealth of customer information and billing system can play a part in helping developers monetize their mobile applications, according to industry observers.

During a panel discussion Friday on the monetization of mobile apps at Appsworld Asia 2011, Steven Frank, business development director for Asia at Wild Tangent, said the current ranking system adopted by appstores makes discovering new apps difficult.

Citing the ranking of games as an example, he noted that among the top 10, the top three are the Angry Birds series followed by apps by big-name publishers such as Capcom.

While some developers might find success through the appstore route, Amir Ofek, regional client business executive for Southeast Asia at Amdocs, said developers should not discount how working with telcos can be advantageous for both parties.

According to Ofek, operators have an "intimate" relationship with their customers and have the ability to provide personalized offerings to their customers.

Thomas Clayton, CEO of Bubble Motion, also noted that operators' built-in billing system is especially useful in countries where credit card penetration is low.

That said, Clayton noted that based on his company's experience, working with telcos can be a "pain" as it takes a longer time to market the app in contrast to releasing the app directly in appstores.

Ofek attributed the complications that arise to a lack of the right tools on the service provider's end. A telco would need to integrate services such as billing, network and content delivery to deliver such a service to its customers, he explained.

On the sidelines of the event, Tom Cheong, Motricity's vice president and general manager for Asia-Pacific, told ZDNet Asia that telcos have "inherent" advantages, from being able to profile their customers and awareness of a customer's location using location-based service (LBS) to a built-in payment system.

However, Cheong noted that telcos face the challenge of a complex ecosystem of handsets. In the past, telcos might build one system for a particular platform but this has grown to become "too complex" an approach, he said.

To that end, service providers can outsource their mobile content delivery system to players such as Motrixity so that they can focus on their core business, Cheong added. He acknowledged that some telcos may hesitate to do so because employees' whose livelihood depends on maintaining the platforms may end up redundant, but pointed out that service providers could end up being dumb pipes while over-the-top players such as Apple and Google "eat their lunch".

In-app purchase better received in Asia
According to Clayton of Bubble Motion, the percentage of Asia-Pacific users spending on mobile apps is comparatively lower than in the United States or Europe. For example, in-app purchase in China is about 30 percent while markets in the West see a rate of 60 to 70 percent, he said.

He attributed this to users in the region being more price-sensitive. However, he noted that there will be "tremendous growth" in mobile app spending in the region as the user base grows.

Currently, developers are monetizing their apps in three ways: selling of app, ad-supported apps or in-app purchases, he said.

Clayton noted that in-app purchase will likely grow as it did in the U.S. from 30 percent in 2010 to 68 percent 2011 particularly as users in the region warm up to purchasing of virtual goods.

Sharing his experience of selling a stock market app, co-founder of 2359Media, Zhou Wenhan noted that users are more cautious about paying for an app. His app originally cost US$0.99 but the number of downloads spiked after he made it free. He currently monetizes the app through in-app payments.

Wild Tangent's Frank criticized the US$0.99 and US$1.99 price points as something "dreamed up by Apple", noting that there is more room for pricing of apps.

He said his company also offers a pay-to-own model where users pay 25 cents a day for the app. Users will own the app if they keep it on their device for at least four days as they would have paid US$1 by then. However, those who do not like the app can return it and only pay for the number of days they have utilized it.