Emerging Market App Store Wars

As this year has already demonstrated, every mobile device maker is making a major play for emerging markets, with brands both big and small introducing inexpensive devices with the hopes of gaining strong footholds in the lower-price phone category.

With Mozilla debuting a $25 smartphone, Apple re-releasing the iPhone 4 in India (the world's fastest-growing smartphone market) and Nokia launching low-cost smartphones, it's obvious these device makers are not leaving any stone unturned while vying for new customers.

While consistently trying to undercut on price and introduce inexpensive phones is often considered the golden ticket to unlocking emerging market success, there is a second ongoing battle: the app store wars. Consumers in the developing world want smartphones in order to access more complex content on their phones; however, the landscape is vastly different in emerging markets. In fact, according to new research from Upstream and Ovum as well as the The Next Mobile Frontier Report, consumers in Brazil, China, India, Vietnam and Nigeria want the same devices that those in the West covet. In addition, Apple's iPhone is the most desired device (32%), with Samsung coming in second (29%) and Nokia a distant third (13%).



While these consumers clearly want the iPhone, Google Play is the most used app store, with an overwhelming 40 percent of market share. Apple comes in second with 28 percent, but mobile operator app stores are nipping at their heels with 26 percent of the market accessing content directly from them. Simply, the battle is far from over.

So who will emerge the victor? Google Play is currently ahead due to affordable sticker price and access to popular content. Its top position is sure to be challenged by the rise of cheaper devices being introduced by Mozilla and Huawei, but there is also the question of what content users in emerging markets will want to use in the future.

Similar to the West, emerging market consumers are now using their devices to access news, music and social media, but the content that they would like from their phones in the future is more diverse. Travel information, health and educational services come out on top, as access to fast internet for richer media content is unavailable and the power of a smartphone often has a drastic effect on users’ quality of life.

The question brands face, then, is not only how can they make phones cheap enough for emerging markets, but how can they provide for the new era of apps? Will consumers prefer a cheaper phone, or one that is able to provide services that they desire?

Amazon's Kindle has shown that users will choose a device that offers specialized content -- in this case, books -- as long as they can also access popular apps like Facebook, Candy Crush and WeChat. In addition, Nokia’s announcement that it will build its own app store separate from Android may turn out to be a wise decision, as it would enable Nokia to respond to user demands for content more quickly than if it was tied to Google Play.

As it stands, mobile network operators stand to profit the most. A majority of potential smartphone users in emerging markets do not have access to banking or credit card accounts, and as such could not use the Apple App Store or Google Play, even if they wanted to. But to note, mobile operators have already tried and tested payment channels in place. 

This is coupled with operators' ability to leverage the loyalty and aspirational qualities of all the top brands as well as intimately understanding the local market. In the West, we are accustomed to app stores being explicitly linked to the OS of our smartphone, but in emerging markets that mindset does not exist. Users in emerging markets trust their mobile operators as much as they trust Fortune 500 brands. 

By running their own app stores, operators are able to be agile in the marketplace, offering their consumers what they want, and more importantly, marketing to them directly.

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