Despite the stagnant economy, there is no denying that mobile phone use is continuing to rise, along with the demand for even “smarter” devices using more collaborative and data intensive applications. Communications companies shipped 170 million smartphones in 2008, and Apple reported 626 percent year-over-year growth for iPhone sales in its third quarter. Results of a recent Yankee Group survey signal continued growth, with 43 percent of respondents saying they were likely or very likely to buy a smartphone as their next device.
Growing demand for smart devices is driven by consumers’ increasing dependence on their mobile devices, as well as the “app” craze. In a little more than a year, app stores have evolved from offering very basic options to providing applications for virtually any activity – from navigating city streets to balancing a checkbook to calculating the tip after a dinner out. And in addition to all of the practical uses, the availability of games, music and other recreational activities continues to explode on mobile phones.
This presents a compelling argument for wireless network operators to continue to introduce innovative mobile applications and content to drive revenue growth. But the competition could not be fiercer. With device app stores and Internet service providers like Google and Facebook attracting more and more developers, network operators must monetize their networks by opening them up to foster innovative third-party application development. And the time is now.
When it comes to attracting Web developers, wireless network operators have several major competitive differentiators over new, online service providers and handset manufacturers. First, they have valuable existing revenue relationships and, more so than the other players in the apps market, detailed subscriber data including customer service preferences and usage on various devices. This data can be extremely valuable to Web developers by not only ensuring they can monetize their applications, but also helping them to engage directly with end users to test out and eventually adopt new services. In addition, network operators have the huge differentiator of their underlying networks and the ability to incorporate telecommunications features – such as SMS, location, charging or presence capabilities – into applications.
However, traditional network environments have hindered this process with long onboarding times – requiring up to 12 weeks to set up a third-party developer and launch a new service, compared to the mere minutes it takes the pure Web competition. Failure to invest in more agile creation and delivery environments for innovative services will result in lower subscriber base and profitability in the next 10 years.
By opening up their networks with a centralized service exposure platform, operators are able to nurture the crucial provider-developer-customer relationship and tackle the traditional challenges that service delivery platforms face. For example, agile creation and delivery environments allow service providers to maximize revenue by reducing launch delays, which cause lost revenue opportunities. Additionally, with service exposure platforms, operators are able to more effectively and securely control access to the network, manage capacity, handle volume spikes and reduce outages, therefore ensuring they can provide reliable service.
For example, O2, a leading communications service provider in the United Kingdom, recently opened up its network in an effort to create an innovation ecosystem for communications services. The O2 Litmus ecosystem leverages a service delivery platform that embraces Java, Web and service-oriented architecture (SOA) principles blended with native protocols to provide a stable, network exposure platform for application development. O2 Litmus provides third-party developers with direct access to O2’s unique network assets and subscribers to create and monetize their innovative applications. Customers gain early access and the opportunity to actively participate by providing feedback on new service development.
As a result, O2 Litmus’ application developer and active subscriber participant community has grown in the thousands every month since its inception. O2 Litmus’ ability to provide no testing fees, fast onboarding and time to market, 70 percent revenue share and retention of intellectual property has resulted in an impressive portfolio of applications provided by third-party developers – placing O2 one step ahead of the service providers that have not yet jumped on the app train.
Leaders in the mobile industry are already very much involved with and invested in the app store model, so the pressure is on for network operators to “get smart” and open up their networks and foster innovative third-party application development to stay in the game.
Ty Wang is senior director of Product Marketing for Service Delivery Solutions at Oracle Communications.