IPhone Catch-Up Leaves Nokia, Carriers Flooding Show

Apple Inc.’s iPhone has more applications than any other mobile phone. Now the world’s wireless companies are trying to catch up.

This week, at least five efforts to dislodge Apple from the top of the global market were unveiled at a trade show in Barcelona, Spain, as companies from Nokia Oyj and Intel Corp. to Deutsche Telekom AG and Samsung Electronics Co. sought to lure developers of games, music, social networking, news, navigation and other apps to their platforms and smartphones.

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“Everyone wants to be part of the game as the application business is showing tremendous growth,” J.K. Shin, president of Samsung’s mobile-communication division, said in an interview.

All of the new attempts may have an uphill climb as they try to pull alongside Apple, which offers 140,000 apps and has had more than 3 billion downloads from its App Store by iPhone and iPod touch users worldwide. The Cupertino, California-based company has made it easy for developers to design apps across its platforms and provided them clear software tools.

“The Apple store provided a very simple path for developers to create stuff and get it into the hands of users, and there’s no question they’ve done it more effectively than anyone else,” said Nick Jones, a Egham, U.K.-based analyst with industry researcher Gartner Inc. “Now everyone’s playing catch- up. Apple is still way ahead of everyone else, with five to 10 times as many apps.”

Nokia’s Effort

Twenty-four phone companies including Vodafone Group Plc, AT&T Inc. and Deutsche Telekom said they plan an open platform for mobile-phone apps. Nokia and Intel are developing one that makes it easier to create apps for multiple devices. Ericsson AB, Alcatel-Lucent SA and Samsung Electronics Co. are building their own apps platforms.

Nokia’s Intel partnership is banking on a newer, more open approach to draw developers, who can write once to create applications for a variety of devices, and market them through Nokia’s Ovi Store and Intel’s AppUpSM Center, said Kai Oistamo, Nokia’s devices chief. They also plan to bring other companies’ apps to their stores, giving users access to social networking, media readers, games and other add-ons.

“The Ovi Store has been a problem child for Nokia since its launch,” Ben Wood, a London-based analyst at CCS Insight, said. “They’ve already alluded to the fact that that will be refreshed in April so this might be the perfect time to lift the curtain on the new Ovi Store and try to address some of its shortcomings in an attempt to catch up with Apple’s App Store and the Google Android Market.”

Beyond Smartphones

Apple “might not be ahead” in a year, said Gartner’s Jones. “If you look at the numbers developers are looking to reach, Nokia has a much greater number of users. The number of Apple users is still relatively small,” he said.

The apps will also be taken beyond smartphones to lower- priced devices, said Jon Fredrik Baksaas, chief executive officer of Telenor ASA, Norway’s biggest phone company.

“The consumer interest in the iPhone and App Store have shown us that this development path should be extended to the much larger number of other handsets out there,” he said. “Why shouldn’t these applications also be accessible on a Sony Ericsson or more of a normal type of phone?”

Analysts are less optimistic about attempts being made by the carriers’ group to get into the apps market.

“It’s not unrealistic to aspire to getting a piece of the applications space,” said Ameet Shah, a London-based director of consulting firm Pittiglio Rabin Todd & McGrath. “I think it’s hard to pull off. The risk is that when Apple has gone through half a dozen iterations of its applications store, the consortium might just be on their first or second.”

Keeping Pace

With 24 operators all wanting their say, it’ll be difficult to keep up with the pace of the market, he said.

The carriers are betting on their more than 3 billion customers to lure developers.

“Apple did an excellent job in boosting the mobile applications market,” said Olaf Swantee, head of France Telecom’s Orange global mobile business. “But the plan to develop an open platform is the right approach to move the application business to a new level and allow developers to target a much bigger market.”

Creating a platform able to serve multiple handset types is a “good way to go,” said Geert Kolthof, founder and chief executive officer of Netherlands-based mobile application and service development firm Service2Media.

“But the market requirement exists today and the opportunities in the enterprise application space in particular will not wait,” he said.

‘Walled Garden’

The 24 carriers’ plan is aimed at countering the fragmentation in the industry, said the GSM Association, a London-based trade body for wireless companies.

“The customer wants to have a choice of applications, he doesn’t want to have a walled garden,” said Rainer Deutschmann, senior vice president of mobile products at Deutsche Telekom. Regardless of which mobile phone model the customer has, they should be able to download any application they please, as would be the case for users of different computer brands, he said.

Developers may not get on board, said Mark Newman, chief research officer at Informa Telecoms and Media in London, adding that they’ve historically distrusted operators because of unfavorable revenue-sharing deals.

‘Smart Pipes’

“A number of the developers that we have spoken to would rather operators keep out of the applications development community entirely,” Newman said.

Operators could function as “smart pipes” for application services, exploiting the information they have on their customers, such as age, gender and location, to deliver useful and relevant applications, Shah said. In return, they would get a piece of the applications revenue.

“The operators don’t like this idea of becoming dumb pipes, where their services are commoditized, but the writing is on the wall,” Newman said. “They have simply not succeeded in launching these services.”

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