Online Pricing: App Store Wars

February 16, 2010

Apple has figured out online pricing for music. The digital chains are attached to the children of the people at the Barcelona mobile hoe down. I am not sure Apple’s model applies as well to audio books and videos, though. I will admit that the iPhone App Store has been a bit of a surprise to me and my goslings. The iPhone was good looking and easier to use than some of the mobile clunkers I had previously owned. But the different pieces worked reasonably well with iTunes, the iTouch, the iPhone, and the App Store snapping my wrists together quickly.

A few moments ago I popped open my newsreader and saw a headline that caught me by surprise, probably not the magnitude of the surprise that the Apple vertically integrated approach to gizmos evokes, but close enough for an addled goose in the snow.

The article was “Two Dozen Carriers Worldwide Unite against Apple’s App Store.” After a bit of clicking, I noticed that dozens of comments were flashing around the Internet. The basics, according to, a publication “healthily obsessed with mobile content”, reported:

Two dozen of the world’s largest mobile-phone companies, including Verizon Wireless, AT&T, NTT DoCoMo, Deutsche Telekom, China Mobile and Vodafone, are teaming up to create an “open international applications platform,” which is obviously in direct response to Apple’s success with its own iPhone App Store. Release. The announcement was made this morning at Mobile World Congress. In addition to the 24 carriers, the GSMA and three device manufacturers—LG (SEO: 066570), Samsung and Sony, Ericsson—are also supporting the initiative. All combined, the group reaches 3 billion subscribers worldwide, making it easily the largest app-store initiative.

Several observations:

  • In the online monetizing wars, victory goes to the outfit who figures out how to get money and keep others out. The reason that there are a couple of big companies controlling information in certain market sectors is not an accident. The market coalesces around services that amass high value content. Music is not a must have to me, but I think Apple has done a good job of turning information about which I care not a whit into a must-have information type for its customers.
  • Developers go where the money is and keep poking their heads up and honking when a potential new source of money lands in their pond. Developers are paying attention to Android because it is Google, free, and gaining support. If anyone puts a dent in Apple’s shiny vertical consumer combine, it will be Google. Then guess what. Google will be the “new” Apple. It is not Google management acumen; it is the way online markets work for certain information types. I know you don’t believe me, so take a gander (no pun intended) at the online vendors of legal content.
  • The Balkans approach to battling a service-device chain is going to be an interesting management problem. Sony, for example, should have been Apple. Apple grabbed a space Sony dominated and then went at the children of Sony executives. Keep in mind that the folks running these companies united against Apple can find the root cause of Apple’s success by talking to their children. If there are any young employees around, ask them.

Now is it fair, just, and right to join together to beat up on a company that was on death’s door with a boss who was on death’s door? In today’s world, I know two dozen companies who think that this type of behavior is just ducky (no pun intended).

My thought is that the telecommunications companies have problems beyond Apple. Maybe the Balkans’ method is the new management revolution? I will keep an open mind.

Stephen E Arnold, February 16, 2010

No one paid me to write this. Since the write up is about management strategy, I will report scribbling for no dollars to the Federal Consulting Group, a very strategic operation. Do you read its reports? I think the telecommunications companies do. Check ‘em out here.


One Response to “Online Pricing: App Store Wars”

  1. iphone app programmers on February 16th, 2010 7:55 pm

    I too read this news article yesterday and laughed at the lame attempt, call it a last ditch effort, to compete with Apple and the app store. All these companies will band together, spend a ton of money to create an app store then abondon it in 2 years time or less. There are too many disparate devices, operating systems and screens sizes for this to work in a user friendly way. Thats one of the reason why the iphone/ipod/ipad devices work so well.

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