Verizon Wireless’s Motto: Build the App Store, and Subscribers Will Come (Back)
Verizon Wireless knows this: Software sells hardware, and hardware plays a role in your choice of wireless network. That’s why it’s building its own app store. Just consider:
Among the smartphones launched in the past quarter — including Nokia’s N97, Apple’s iPhone 3GS and the Palm Pre — iPhone sales were the most impressive, netting one million units within its first weekend, according to a recent report by technology research firm Gartner, Inc. Sure, Apple’s strong brand image helped. So did pricing. But the biggest contributing factor to the iPhone’s success may be the App Store.
“The App Store business is a facilitator of hardware sales,” according to Shaw Wu, an analyst from technology and media investment firm Kaufman Brothers, in an interview with The Wall Street Journal. Indeed, users have downloaded more than 1.5 billion apps from the App Store within its first year.
How is that affecting Verizon Wireless? Since it signed an exclusive contract with the iPhone, Verizon Wireless’s long-term rival AT&T has grown its subscriber base substantially. In fact, AT&T reported more than 2.4 million iPhone activations for the second quarter, 35 percent of which were new to AT&T.
To defend its market lead, Verizon Wireless is launching its own app marketplace, the V CAST Apps Store, by year’s end. “We are intent on making the Verizon wireless platform the choice for developers,” Verizon Wireless CFO John Killian said during the company’s earnings call.
Verizon Wireless says developers could potentially reach a wider audience through V CAST because, as part of the “Joint Innovation Lab” (JIL), Verizon Wireless and other carriers like China Mobile, Vodafone and Softbank would push for common standards, enabling developers to create apps that could work across different operating systems, including RIM’s Blackberry, Google’s Android, the Windows Mobile, Palm and Symbian (used by Nokia).
Verizon Wireless also promises developers a simplified and speedy app approval process that would take no longer than 14 days, a jab at the App Store’s own vetting process, which more and more developers say is too restrictive, too mysterious and sometimes lengthy.
And to further sweeten the deal, Verizon Wireless is offering a $50,000 prize in an application development contest.
Will V CAST be able to cut into the iPhone’s market share and significantly help Verizon Wireless? V CAST might stand a chance if it can attract some of the best app developers to switch to its camp, something that, considering the App Store’s popularity and first-mover advantage, may not be an easy feat.
