I spent yesterday at Verizon's first developer conference. It was a very interesting event and I'm thankful Verizon hosted it (and that I got to go). Here are my key takeaways, and below the details on them:
- VZW is launching their own app store featuring integrated
billing on Blackberry Storm.
- Channel conflict, addressable market for stores will remain
challenge thru 2010
- Verizon is serious about committing to JIL
- App stores can go
from a small trend to market dominance in 12-18 months
- Many off portal players and partners are struggling now with
payments and distribution, this will quickly pivot to needing to solve
merchandizing
- BREW market is changing, will app stores replace off-portal?
What was it: Verizon held their first developer’s conference
yesterday in San Jose to discuss plans for opening network API access to third
parties, introduce application stores on smartphones, and discuss the roadmap
for non-smartphones for rich content. The event was over-subscribed. 800 attending
filled up the venue, another 500 registered for the webcast. Some VZW people I
spoke with said they were surprised at the level of interest. The show was a
very well-run event.
I would estimate the crowd demographic was 70% partners/ISVs
(ranging from core vendors such as Nortel to device OEMs such as Samsung), 10% leading
on-deck portal vendors, 20% developers and small content players who are
currently iPhone focused.
The details:
Verizon app store
Carrier/direct billing and on deck merchandizing are the two
areas Verizon won't give up and sees as critical value differentiator.
VZW is only planning on launching VCast app store on the BB Storm,
then the remainder of the BB portfolio, then WM by end 2010 (RIM and WM basically
comprise the full smartphone portfolio). This means that instead of the 86
million subscriber base frequently cited the addressable market will begin in
the hundreds of thousands and scale to 20-40M within a year or two. A big
market, but not as big as the single form factor iPhone (i.e. you will still
have to write/port multiple apps on VZW to achieve similar market reach as a
single app on iPhone). Until VZW has their VCast store on the Curve it will not
be a meaningful distribution point for most merchants.
Channel conflict: App Store confusion remains
During the morning keynote talks by VZW senior execs they
said both that VZW doesn’t think multiple storefronts “is the best experience”
and also that offering tens of thousands of apps on one store introduced “too
much clutter” in a thinly veiled knock of the iPhone app store. However, during
Q&A they claimed VZW would allow discovery and download of other (i.e. OEM)
storefronts onto devices and that VZW believes helping devs get distribution
should be a priority for them.
JIL gets real
Stratton said that Verizon’s stance was that “Platforms rule”
and Verizon will create tools and distribution across web & mobile to
create value, not try to own the entire customer experience. Each Verizon
executive began their talk by saying they had not opened up their networks or
attitudes soon enough and were now trying to do so. Their concrete
demonstration was an embracing of JIL. Balsille of RIM then announced a new
eclipse-based web sdk for Blackberry, bringing RIM into alignment on JIL from a
tools perspective. In the breakout session Verizon demonstrated eclipse-built
sample apps and code to demonstrate current API capabilities.
VZW is launching network location and sms/mms APIs by end of 2009, other APIs following in 2010 (address book, calendaring, all TBD). I'd say that we'll really have to see the implementation details and documentation to know how meaningful these will be.
Verizon sees publication ease and speed as critical
Verizon’s goal for application distribution is to not test,
police, or judge app UI and experience--only network impact. This conflicts with
their many comments that “reducing the clutter” was important for app stores.
At several points during the day VZW and RIM both referred to having a big
inventory of long tail content as “clutter” and claimed it was a problem, not a
strength, of the iPhone. Verizon claims it will focus on quality but then also
claims it will not test or judge apps based on content and that legal review
will be minimal (screen for no adult or illegal). Verizon is launching store
with no registration, testing, or certification fees while promising a 14 day
launch once partners have registered with their app store.
Payments and distribution rule the day now, but soon
demand generation will
Customers and partners at the show were focused on what
tools would be available, what terms were required and what costs are implied
in publishing. Neither Verizon nor customers are planning for how to tackle discovery
and monetization which are, of course, the main challenges of the successful app store.
Many off portal players and partners are struggling now with solving payments and distribution,
this will quickly pivot to needing to solve merchandizing (demand generation, audience targeting,
context/personalization of content).
BREW market is changing, will app stores rule off portal?
Stratton said Verizon’s device market has flipped from
10-15% smartphone to over 45% and growing over past 12-18 months. The speed has
astonished them. For their non-smartphone base, VZW announced a renewed BREW
distribution deal allowing for free apps on BREW phones and eliminating
developer fees. However they also said they hoped to port over the entire BREW catalog
to the VCast store or at least offer that option to BREW publishers.
If Verizon can deliver on its 14 day publication promise,
and has limited review of apps and app content, this would present
substantially lower costs for content publishers on the distribution side and a
smaller but more intensive user base on the demand side relative to the current
off portal market. If this happens off-portal content could rapidly migrate to
app stores. This is definitely a trend to watch for.