Chinese and Indian mobile smartphone makers such Xiaomi, Vivo, LeEco and Micromax that have managed to notch up sizeable sale of handsets in the country are adding services to their repertoire.
The plan is to offer a range of apps for gaming and video-streaming, among others, and create new revenue streams. Now that’s a good business strategy, and a tried and tested one, too. By none other than Apple.
Its App Store is a one-stop-shop for a range of apps applications that run only on Apple devices and a highly successful one too.
Why would these smartphone makers want to develop apps that run exclusively on their devices? All of them use Android and so all customers download the same set of apps from Google’s PlayStore.
With both the hardware and the software getting commoditised, there is very little to distinguish one Android phone from the other. That’s in sharp contrast to Apple’s offering. Various studies have also shown that Apple users tend to spend more time with their devices than Android users.
Apple wayWhen Indian and Chinese device makers are considering developing India-specific apps, they are possibly trying to emulate the Apple strategy. The sale of an iPhone or an iPad is a source for one-time revenue from a customer. But when the same customer downloads apps, music and videos from App Store over the lifetime of that device and pays a small fee for many of those downloads, the company earns additional revenue.
The App Store hosts more than 1.5 million apps and of these only about 40 per cent are for free. Yet, it has reported more than 100 billion downloads; the most downloaded ones being games. Surprisingly, business apps are the second most downloaded ones and education apps the third.
Just these three numbers illustrate the diverse uses people put their devices to. That also points to the potential to use the mobile devices to deliver various services — including those the government should.
For Apple, the investment in App Store has paid rich dividends. App Store account for about 12 per cent of Apple’s total revenues.
The App Store revenues for the quarter ended March 26, at $5.99 billion, were 17 per cent higher than revenues from sale of Mac computers and laptops. . App Store revenues are less volatile than hardware sales, quarter to quarter, and so makes the company’s topline look better.
Other revenueChinese and Indian Android device makers too realise they cannot just rely on revenues from device sale anymore. There is very little to distinguish one phone brand from the other. Therefore, the value-addition has to come from exclusive apps and content.
Creation of brand-specific and India-specific content will also mean that many more young techies and even those who develop apps as a hobby can find opportunities to channel their creativity. Chinese mobile maker LeEco’s decision to set up a 1,000-people facility in Bengaluru to develop content and apps aimed at Indian users means more jobs.
Partnerships with content developers too will prompt new startups. Apple has paid app developers over $40 billion over the years, and there is no reason why developers in India should not be able to earn a few billion from devices makers before the end of this decade.