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Posted by on March 9, 2011 in Uncategorized

 

Mobile Commerce: Entry Strategy for competition against Apple?

Apple is a formidable incumbent in the mobile industry and a steady stream of new products reinforces the barriers to entry for new players. Unlike the early 1990s, when Microsoft eroded its dominance with software that could run on any personal computer clone, Apple is alert to any potential competition. Yet, its dominance is for now limited to media content. Mobile e-commerce is still in its infancy and a potential point of entry for competitors. Rich customer experience has allowed Apple to maintain its dominance. A player in the mobile commerce space, on the other hand, could compete on reach and change the competitive dynamics.

The growth of mobile commerce has lagged the overall market expansion for broadband mobile internet.  This is in part due to slow acceptance of mobile payments systems for mobile commerce. More importantly, the fragmentation of the mobile web with multiple platforms and devices raises costs of applications development and limits the reach to customers.

Native applications gained momentum at a time the web was not yet optimized for the small form factor of a mobile device. They provide rich experiences especially for media content services. Additionally, they ease
the pain of accessing content on-line and extend application use off-line. The applications stores provided a convenient means for small businesses to make payments on the web and gain visibility. Native applications have created barriers to entry with their gains in brand equity and customer acquisition.

Native applications’ wheel of fortune is beginning to turn even as they reach their apogee. They are harder to discover in the clutter of applications stores. Their usability deteriorates as download time increases with higher usage. Developers have to pay a high percentage of their revenue to the applications store. The applications stores limit the flexibility for online e-commerce stores who want to have control over the distribution of their services and the tracking and management of customer experiences. Recent acquisitions of patents by Apple
suggest that it wants iTunes to become the conduit for mobile payments further restricting consumer choice.

Concurrently, web browsers like WebKit have improved and are better adapted for mobile devices. HTML5 provides a foundation for richer experience on web browsers with its ability to integrate GPS, cameras, motion detection and more.  Device-specific APIs also enable leveraging of the functionality of the device such as location. In an environment of multiplicity of devices, web browsers extend reach with their cross-platform
capabilities. Social networking applications are updated faster on web browsers.

Recent data suggests that web browsers are gaining traction. For the year till April 2010, the annualized growth of web applications was 403% while native applications grew at 144% according to a Taptu report. Shopping and related Services were the most significant driver of the growth with a share of 22.1%. To be sure, the growth rates are not exactly comparable with very different base levels.

 

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