Vodafone Announces App Store

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Innovative Billing Model

The company has a few other tricks up its sleeve, too. For one thing, Vodafone aims to offer apps that work across a variety of handset software environments, unlike sellers such as Apple, Nokia, or RIM, whose online stores offer only programs that run on their own devices. At first, Vodafone will concentrate on programs written for the Symbian operating system—used primarily in Nokia and Sony Ericsson handsets—which now commands more than 50% market share in smartphones. Later, it plans to offer apps running on other platforms, including perhaps Linux.

Vodafone also aims to kick-start the mobile apps ecosystem by letting developers link their programs directly into its centralized billing system. That way, instead of buyers having to charge small amounts of money to their credit cards for each application they download, the cost will be added directly to their Vodafone bills. A spokesman says Vodafone also will offer access to additional network capabilities by yearend, though he wouldn't say which ones. IDC's Delaney speculates that potential candidates could include Vodafone's text-messaging infrastructure or even its customer service. That way, for example, a developer might be able to create an app that delivers alerts via text messages to Facebook users.

"By giving [developers] simple access to our global customer base and network assets such as direct billing and location awareness, we will help them make more money while providing our customers with the innovative services they want," Vodafone Chief Executive Vittorio Colao said in a statement.

Of course, the objective is to create a new revenue stream for Vodafone. But cognizant that earlier "wireless Web" initiatives failed in part because mobile operators starved software developers by hanging on to too much of the lucre, Vodafone says that it will keep just 30% of the price paid for each app and will pass the remaining 70% back to publishers.

To spread the footprint of its apps store beyond its own operating units, Vodafone plans to distribute its software toolkit via the Joint Innovation Lab (JIL) initiative, a partnership it established last year with China Mobile (CHL) and Japan's Softbank (9984.T). JIL was originally set up to help developers create software widgets for the 1 billion customers served by the three partners' networks.

Although direct access to Vodafone's app store will be limited to its own customers, some analysts reckon that by teaming up with JIL, Vodafone could give developers who write programs for its store access as well to non-Vodafone mobile subscribers in China, Japan, and the U.S. That could make for an appealing alternative to writing apps for Apple.

Capell is a senior writer in BusinessWeek's London bureau .

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