RIM, others face uphill rivalry with App Store

Apple has built-in advantages over planned software stores, starting with iPhone.

If Research In Motion opens its BlackBerry App World online store next week as rumored, it will be the second major mobile vendor to emulate the iPhone App Store and won't be the last.

RIM announced plans for its software store last October, calling it a place for developers to sell BlackBerry applications directly to users. Through a partnership with eBay's PayPal division, RIM will let consumers use the popular online payment system to buy the applications.

Executives said the store would launch in March, and on Friday, RIM offered a sign-up list for users to be notified as soon as BlackBerry App World went online.

Though Apple's App Store wasn't the first online shop for mobile applications, it set a new standard for such stores and rode on the iPhone's success to change the way software for phones is sold.

Previously, carriers were the main channel for phone applications, but the App Store put a handset maker in charge. Apple said last week that there have been more than 800,000 downloads from a selection of more than 25,000 applications at the App Store.

Google has already followed Apple's example with the Android Marketplace. There are more than 2,300 applications now available from that store, and the average user of a T-Mobile USA G1 handset has downloaded 40 of them, a T-Mobile executive said last week.

Microsoft has also outlined plans for a mobile software store, the Windows Marketplace for Mobile, later this year. Palm plans to launch a store later this year to work with its upcoming Pre smartphone.

Apple will be a hard act to follow for all the upcoming mobile stores in attracting great applications and shoppers, said Roger Entner, head of telecom research at The Nielsen Co.

"For Apple, it's the device that made the innovative applications," Entner said. "The App Store just made it easier to bring it among the people." However, once the first wave of applications did well, their apparent business success led some developers to join in for the money, he added.

One reason RIM and others will have a harder time is that Apple has only had to sell applications for one handset and for one carrier per country. The BlackBerry platform spans several phone models and service providers.

Today, when subscribers buy an application from a carrier, they typically can download it again later to another phone, as long as there's a compatible version, Entner said.

Such swaps are likely to be more complicated for software bought from a RIM store, he said. RIM will want to allow its customers to download the product free after changing carriers, but the new service provider will want to get its share of the sale.

"The carrier won't take the revenue hit," Entner said. In the long term, handset stores run by device makers will give way to carrier stores because of these business complications, he believes.

Like other Apple rivals, RIM has tried to distinguish its shop from the App Store.

For example, RIM said in October it would spell out its terms for developers as clearly as possible. Some developers have attacked Apple for allegedly removing applications from the App Store based on policies that weren't clear.

Large enterprises, the backbone of the BlackBerry customer base, won't even be very interested in shopping on App World, Entner believes. IT managers in big organizations will buy applications in bulk from the vendor or have software written expressly for them, rather than buying it from an online retail store.

However, small businesses may find it useful to pick up a few productivity applications over the phone, he added.

"The smaller the enterprise, the more excited you should get," Entner said.

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Stephen Lawson

IDG News Service
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