All said, I think webapps + Carrier billing are the most credible upcoming threat to the App Store so far.
Peter-Paul Koch agrees and fills in details:
One of the major changes 2011 is going to bring is the start of operator billing on the web. It will provide a user-friendly way of making mobile (and web) payments without those silly credit cards that are preventing the majority of the world to participate.
Koch dubs it “Operator Billing”, but North American-types are going with “Carrier Billing.” Same difference.
Koch also brings up a point I hadn’t deeply considered:
Banks and credit card companies of the world, be very afraid. The operators will come to take your business away.
Koch is right that technically carriers could rapidly dominate cashless purchase that today is the near-exclusive domain of credit/debit cards. Two reasons why it may not happen:
Banksters own more of the US government than Carriers do. Don’t expect the dominate transactional players to cede their perch without a lobbyist fight. Politicians, of course, welcome this profitable-to-them conflict and will work to extend it.
Carrier executive management is dumb. Collectively they lack foresight to join forces to avoid fragmenting the mobile payment marketplace and don’t have the web-savvy to create an easy-to-adopt payment HTTPS API.
That’s why my attention perked up when I heard Google already launched carrier billing with AT&T:
Carrier billing: In December, Google launched its first instance of carrier billing with AT&T, where users could directly bill apps to their phone bill rather than using another payment system. Expect Google to institute more such billing arrangements with carriers around the world, Chu said. He added that working with carriers to set up billing was both expensive and time-consuming, but a very valuable feature to users, and one that could help increase the spending on Android apps.
Google also is pushing for mobile web apps:
HTML5: Chu didn’t add too much here, but said that for Android apps, Google was “betting on” the new Web standard, HTML5, as a way to create apps.
While Google has Asperger’s and isn’t my choice for Leader of the New Carrier Billing Era, they’re exactly what the carriers need if carrier billing is to achieve takeoff within the next 2 years. Google can provide the inter-carrier coordination today along with the HTTPS APIs.
Here the big problem is, again, the carriers themselves. The mere fact Google has already made a deal with AT&T means the other carriers will view Google with even more suspicion. Carriers are unwarrantedly egotistical (they think they can do it all themselves) and don’t want to grant Google a lucrative payment bottleneck, even temporarily.
In short, the carriers are short-sighted enough to stunt a new long-term market worth hundreds of billions — eventually trillions — because it can’t be all theirs.
Listening to episode 2 of the JSConf Live podcast, around 19 minutes in interviewee Brian LeRoux brings up oneAPI (lightly edited, emphasis mine):
There’s a new initiative from GSMA, which is a really big consortium of Carriers and operators mostly in Europe. They’ve come to Canada. They’re doing a pilot program and it’s a terrible name. It’s called oneAPI. And the idea is that you get access to [cell] network APIs, not just device APIs. And it’s pretty fascinating.
So what are the network APIs? Well the Carriers know your geolocation, not based on a device GPS but based on cell tower triangulation. They’ve got fantastic APIs for sending text messages, SMSs, push notifications. And the killer API they have is billing.
And so with billing, it goes straight onto your phone bill. It’s something that’s going to be exposed to all the Canadian operators very soon. From one single endpoint you can hit any device that’s in Canada. It’s a pilot, and if it goes well — and it looks like it’s going to — they’re going to branch it out to Europe, Asia and the rest of North America.
In case it’s not apparent, Brian is talking about web apps that allow payment via your Carrier. That is, website charges that land directly on your monthly phone bill.
Thoughts:
Apple (rightfully) brags about the number of credit cards they have on file via the iTunes Store. But Apple’s absolute number of accounts and average monthly transaction amount is dwarfed by the Carriers.
In today’s world, you need a cell phone. Thus, you need a Carrier account. You don’t need an iTunes account. When money gets tight, iTunes transactions look frivolous while phone bills feature an aura of utility.
People are used to paying ~$50-$300/month for their cell phone. It’s even easier for small purchases to disappear into your phone bill than on a credit card you have on file with Apple. See: Ringtones.
Carrier executive management is dumb compared to Apple. Not Record Industry-level of stupidity, but Apple can easily out-think them and try to box them into a corner.
Even if/when the US Carriers figure out they can carve themselves a piece of the Webapp Store pie, they’re not going to execute well. Think fragmented billing support, usury percentage of sale prices and piss-poor developer+customer support.
Still, the Carriers have a lot of power with their customers locked into multi-year contracts, and most folks are more loyal to their Carrier than their phone’s manufacturer.
All said, I think webapps + Carrier billing are the most credible upcoming threat to the App Store so far.
