How to Monetize the Apps Market


mass market uptake of smartphones and the simultaneous tablet explosion have
defined the industry over the past 18 months. Recent figures from Gartner
revealed that global smartphone sales
will reach 468 million units in 2011, while Forrester expects over 24 million
tablets will be shipped this year.


A report by IDC states that smartphone sales in
India has recorded a 34.2 percent quarter-on-quarter growth and a 294.9 percent year-on-year
growth. India is thus one of the hottest targets globally for the smartphone
market. The opportunities for apps in India are immense. India is a huge market
with high adoptability rate. The number of smartphones and mobile applications
that are being built in India seems endless. A recent report by Informate
Mobile Intelligence states that the number of Indian smartphone users visiting
App Stores has increased by 108% in October against a year ago during the same


A new entrant to this is the Indian government.
Governments across the country are busy mobilizing their operations and their
workforces. The sector has emerged as an enthusiastic consumer (of mobile
enterprise apps), and has niche requirements of developing its wireless
capability, especially for domains of security, reliability, and scalability of
its operations.


In lieu of all this, the number of mobile apps
built in India is increasing on a daily basis. With such vast potential,
commentators could be forgiven for thinking that Application Service Providers
(ASPs) need only develop compelling products and reap the revenue rewards. In reality,
it is far from this simple.


To begin with, ASPs have traditionally been
restricted by the payment mechanisms available. With credit card-based only payment
systems, they have been unable to reach a whole market of non-credit card
owners. Meanwhile, the payment options available for apps have traditionally
been overly-complex, requiring credit card details which disrupt the user-experience
and give rise to fears of identity theft. Finally, the rigid pricing structure
of premium SMS has prevented the opportunity for more competitive pricing
flexibility which could stimulate user uptake and developers’ revenue streams.


In order to fully monetise applications and provide
a flexible payments infrastructure, there needs to be a significant sea change.
Furthermore, mobile network operators need to ensure that they remain part of
the apps ecosystem, beyond purely serving as a bit pipe for third-party


Direct operator billing is quickly emerging as the optimum
approach to overcome these challenges. It enables apps and other services to be
paid in real-time, allowing ASPs to charge subscribers directly to their mobile
phone bill via a -one-click’ buy process, regardless of whether the consumer
has a pre- or post-paid contract or credit card. 


As well as widening the potential market, the one-click
process provides a more user-friendly experience, which should further
encourage apps consumption. Indeed, according to Nokia, one-click billing leads
to 13 times more payments being made than over credit cards, providing tangible
proof of the revenue opportunities this particular payment mechanism offers. 


Furthermore, direct operator billing also ensures a
reduction in revenue leakage with authentication and authorisation conducted in
real-time. From an application developer’s perspective, it also enables greater
price flexibility, allowing developers to vary app prices.
pricing flexibility is beneficial from the point of view of driving developers’
bottom line. An app’s popularity within application stores is dictated mostly by
its sales. Therefore, by being in the position to lower and differentiate their
prices, developers can move their apps up the popularity ratings within app
stores, helping them to drive further sales. This points towards a more sophisticated apps ecosystem not previously
seen, further changing the way we pay for mobile content.


It is also important for such flexibility to extend
to the connectivity method used when buying apps.
users tend to consume a greater amount of data and for cost reasons, they tend
to use WiFi more often, especially when at home. Direct operator billing can be
facilitated for users on both 3G and WiFi
networks. Furthermore, there is a growing
trend in users purchasing apps via WiFi – on average, more than 30 percent of
transactions come from WiFi, reinforcing how critical this connectivity
flexibility is.


There is no doubt that direct operator billing represents
a mobile billing revolution. As the mobile platform increasingly becomes a primary
point for both purchase and payment, direct operator billing solutions offer comprehensive,
real-time, one-click, direct billing for apps and in-app purchases. Such solutions
will not only help to facilitate increased apps consumption in the short-term,
but should also stimulate the further evolution of the apps market in the


Direct operator billing unites operators and ASPs
by connecting their businesses, while at the same time allowing end-users to
download apps with ease. In short, it simplifies and accelerates the uptake and
monetisation of applications on mobile phones, optimises the end-user
experience, while driving revenue for ASPs and allowing operators to maintain a
competitive position within the value chain.


By Raghunatha Chary,

Regional Vice President Sales India, MACH

[email protected]