Nevertheless the privacy issues cannot be overlooked. The Internet giants have (more or less reluctantly) done some changes to their services in order to protect users’ privacy, but as long as the business models are based on ads they will continue to be reluctant to change the rules of the game.

Consumers’ privacy concerns are creating an opportunity for someone else to provide privacy management as a value added service, provide security management services. Recently, examples of privacy management focus can be seen in the emerging portfolio of family life management and communication services (Fambit, Cozi, Family2job etc). These services are based on innovations from social networking and digital calendars bringing features into a family context. We all set different privacy expectations on our family life than on Facebook networking.

Telecom operators are used to obeying rules and regulations, and (at least in theory) they have the possibility to associate themselves with services where privacy issues are properly dealt with. Operators might not be best suited to develop or innovate social media services themselves, but they could instead provide the authorization and authentication services and/or act as trusted distributors for services where privacy management is central. Through careful segmentation, operators could find their strong niche in the privacy area – possibly even beyond their current technology assets.

But to avoid backfire, operators will need to carefully and efficiently avoid even the smallest privacy related pitfalls; like AT&T recently got painfully reminded about. Gaining trust from the consumers is only possible if one has all one’s ducks in a row.

/Suvi

Suvi is an Analyst at Northstream

Feedback to blog@northstream.se

What I think we are witnessing here is not really giving up, it’s the brave move by an operator to admit that they are not the ones best suited to run a developer ecosystem. Just because Apple succeeded in creating huge momentum with their App Store, it’s not that easy to copy the recipe and hope for success. We witnessed the same chain of events with mobile music stores a few years ago after iTunes Music Store had proven the way to online music sales. Too many decided to set out on the same journey without properly answering “why” and “how”. Most failed to create sweet music on their income statements.

In contrast, when launching Android Market, Google seems to have done their positioning homework. Apple upset some developers – the suppliers – with a proprietary, closed operating system and a strict application approval process. Android offers open source and virtually anything to be published on Android Market (though here we have some other concerns, soon to be published on the blog). Google also saw that there was demand among consumers for devices that had great user experience but weren’t necessarily an Apple product. Realizing the unbalanced supply and demand opportunity, Google could successfully move into the market.

Nokia’s Ovi needs to be mentioned as well. Ovi’s lack of real success is likely due to bad experiences both from a consumer and a developer perspective. It simply was, and perhaps still is, too cumbersome for people to download and buy applications. If consumers (demand) are not impressed you will soon run into trouble attracting the developers (supply) due to lack of market, thus making it very hard to get momentum.

The question now remains how the rest of the app stores should position themselves for survival. Will operating system specific app stores stay as the dominant players? Do initiatives such as the Wholesale Application Community stand a chance? Regardless, a developer programme or app store must carefully serve both the supply and demand side. Suppliers, the developers, need enough and constantly updated features to keep them happy and productive while differentiating the programme from others. Demand is created by consumers who want easily accessible, high quality applications with a consistent user experience. If you cannot keep a good supply/demand balance, your developer programme risks failing.

T-Mobile should be credited for pulling the plug on a venture that would likely not receive the attention needed, internally or externally, to stay competitive and profitable. To compete with the industry leaders you need not only be very quick and innovative in the applications field, something that mobile operators are not geared up to. You also need to have great reach and scale, something a mobile operator typically does not have with its shared national or regional footprint.

The way we see it, operators shall first and foremost do what they do best: coverage, quality and operational excellence (see our December 2009 blog post Prediction #3 – Shoemaker stick to your last). This is the uncompromisable base for a healthy business in the longer run. There are several value adding roles for operators, but being an app store is probably not one of them.

/Erik

Erik is a Consultant at Northstream

Feedback to blog@northstream.se