Application overload

Operators must find their place as a key partner in the burgeoning mobile apps sector
Khaled Al Kaf, CEO, Mobily, said that surging mobile use will drive demand for apps.
Khaled Al Kaf, CEO, Mobily, said that surging mobile use will drive demand for apps.

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With the worldwide market for consumer mobile apps expected to be worth some $52 billion a year by 2016, according to Juniper Research, it is not surprising that telecom operators are increasingly looking for a share of the action.

As internet use increasingly shifts to mobile devices such as tablets and smartphones, so apps are becoming an increasingly important part of the mobile ecosystem, and the Middle East is certainly no exception to this global trend.

As attendees at last month’s Mobile Show in Dubai, UAE would testify, the interest in apps in the Middle East is huge, with developers and content providers from around the world eager to weigh-up the market and assess its potential.

And while operators have sometimes appeared to be at risk of being left on the sidelines in terms of apps in the region, that is now changing, with regional telcos investing heavily in content, payment platforms and even app stores in a bid to take their share of the revenue.

Indeed, in its report, Juniper Research gave a nod to operators by pointing out that the introduction of operator billing across leading storefronts such as the Android Market and Ovi Store has led to a dramatic rise in revenues being generated from apps.

Khalid Al Kaf, CEO of Saudi Arabian telco Mobily, was among the operators present at the Mobile Show in April. During a keynote speech on the first day of the event, Al Kaf pointed to enormous projected growth in mobile trends that lend themselves to the growth of apps.

“In the mobile market place, we have connected 5-6 billion people globally, and we are moving to connect screens, and there are about 15 billion screens that use the internet," he said.

He added that in the coming years, operators will be connecting “things” such as cars and household goods, leading to an even greater number of connected devices. “The market place for that is that 50 billion things will be connected. So there will be connectivity between things, people, screens, and places.”

This will lead to a shift in the way people interact with the internet whereby information will increasingly find people, as opposed to people searching for information. “You will no longer be searching for the information, information will find you. I expect that information will find the individual in the year 2015-16. We will find the customer at the given time at the given instant for a given behaviour, and for a given prospective we deliver the application and content that he or she wants,” Al Kaf said.

He added that the different parties in the ecosystem need each other. For example, apps and content developers need operators to provide connectivity to devices around the world.

Al Kaf is not alone in his optimism that operators stand to benefit from the burgeoning apps market. Indeed, while many analysts and operators have complained about apps that canabilise the telcos’ revenue streams, such as WhatsApp and Skype, app developers also rely to a large extent on the operators’ strong relationship with their customers. For example, operators have established billing systems and customer relationships which can represent a valuable path to market for app developers and content producers.

David Ashford, an independent apps consultant and former GM of Apps Arabia, believes that operators have a firm place in the apps ecosystem. He says that operators can best profit from apps by “getting to know” their customers better and then tailoring packages for customers that use different types of apps.

“Operators are constantly looking at increasing ARPU. That is the key metric for an operator, and they can do that by understanding their customers better, by creating better packages of tariffs, by creating better data plans, by working with publishers and developers of apps to provide apps for free to consumers already on the handsets when they get their handset,” Ashford says. He adds that operators could tailor packages to support services built around concepts such as augmented reality, location based services and near field communication.

“Etisalat has been very active in this area and this is great. If packages were tailored around the way in which people consume bandwidth for their content and functionality needs then that is a great thing that the operators can do,” he said. “The operators are working hard to do that. I think the great thing is that everyone involved in the ecosystem in the world of apps understands that every other partner has a valuable role to play and that everybody needs to win for long term success.”

Augmented reality apps

Apps based around augmented reality also came under the spotlight during the Mobile Show, and this was the key theme of a keynote address by Martin Herdina, CEO of Wikitude, a developer of augmented reality apps and experiences for mobile devices.

Herdina pointed to numerous applications that use augmented reality, such as apps that inform the user of last-minute vacant hotel rooms that match their specific needs and allow them to book a room via their mobile device.

Speaking on the sidelines of the Mobile Show, Herdina said that telecom operators can use augmented reality apps as a “differentiating factor”. He pointed to the example of T-Mobile in the US, which bundled a phone with Wikitude’s mobile augmented reality browser. The device was specifically targeted at families, and made use of apps that cater to family needs, such as being able to locate family-oriented locations – such as parks or playgrounds – in real time.

“They were pre-bundling Wikitude with their phone and were really deciding everything around it, giving family members the ability to search for a playground around them, to experience information on baby care products etcetera, which was really making this a differentiator,” Herdina says. He added that all parties stand to gain from augmented reality. “In some cases it is the OEMs, like in our case it's BlackBerry we work very closely with. Sometimes it is just an independent content owner and sometimes it’s a carrier, and the idea is that it’s a package of all three parties,” he says.

Developers perspective

Alexander Rauser, CEO of Prototype, a digital solutions consultancy and apps developer, is heavily involved in apps development for third parties, and also have experience of marketing apps and encouraging others to create apps.

Rauser, who founded a developer community called Yalla Apps for Windows Phone apps in 2011, has a strong overview of the apps market in the Middle East. Much of the growth he sees in the market is centred around apps for specific brands, produced for companies. He says that there is a lack of local, regionally specific apps at the moment.

“In terms of trends, the apps that you have are either brand apps from companies that want to market themselves. So any company that wants to have mobile as a new channel to talk to their consumers. Even if they take a mobile website into consideration, it is not really an app but it still works on a mobile device which is important.

“In terms of consumer apps that you sell in the style of Angry Birds and Instagram, it is not really happening yet. We have a developer from Yalla Apps who built a Twitter client for example. It is a very successful application, but of course in the global market. What is missing is a lot of localised content, especially Arabic applications.

However, the lack of regionally specific apps may be part of a broader trend whereby developers prefer to target the global market in a bid to maximise sales or reach.

“The problem is if you focus on the GCC and Middle East you have a more limited market than if you go global. That is why most developers just want to go global and develop something that is attractive to everyone, so that they can maximise their returns,”Rauser says.

In terms of Prototype’s business, Rauser said that his company is experiencing a rise in demand for app development and from companies that want to increase their mobile presence, even if that just means creating a mobile version of their website. “Mobile is becoming more important. We see it as complementary we put in mobile solutions wherever it’s appropriate,” he said.

Prototype has taken steps to help drive local app development by establishing Yalla Apps with Microsoft. Prototype took this step because after it initially started developing applications for Windows Phone, it discovered that there was no market place in which to publish them in the MEA region. “We came up with Yalla Apps, which takes the applications from developers from 69 counties. They develop them, pass them to us and we publish them on their behalf in the global market place."

Gaming growth

One area where there is clear growth in the Middle East mobile apps and content sector is gaming. With a large population of young people in the region, the mobile games market has huge potential, and this is recognised by companies such as Indian games developer and publisher, Nazara.

Last month, Nazara signed a deal with US games giant Electronic Arts (EA), to bring EA’s mobile games to the Middle East. The company, which has its Middle East headquarters in Dubai, has also established games clubs with Middle East operators including Du and STC.

Savio Saldanha, Nazara’s CEO for the MEA region, said that “things are going pretty well” in the Middle East and adds that the company is actively looking to work with more operators.

Nazara first brought the games club concept to the region with Du in April 2011. Du Games Club allows subscribers to download and play an unlimited number of games for AED2 per day. The service marked a major shift from the ‘a la carte’ model that had previously dominated the mobile games sector in the region, Saldanha said.

Nazara later developed a similar games club for STC in Saudi Arabia, and for an operator in Bahrain. The company is in discussion to launch with more operators in the region, Saldanha told CommsMEA.

“We are looking to expand with other operators in the region. We are actually in talks with a few operators, we have a lot in the pipeline and we actually signed a few operators in April,” he adds.

In terms of gaming trends in the region, Saldanha said that football and racing games are particularly popular. “Need For Speed did well and FIFA 12 did well. I think the market’s all about having the latest mobile games on your phone. It depends on how easy the game is to play with,” he says.

Nazara works closely with the operators to market the games service, as the partnership is based on a revenue sharing model.

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