Analyst tolls death knell for carrier app stores

Telecommunications analyst Paul Budde has predicted the demise of Premium SMS, and doesn't expect mobile carriers to fare much better in their attempts at building mobile app stores to take on the likes of Apple and Google.

In a blog posting published today, Budde predicted that the revenue derived from carrier-independent app stores will have trumped the content businesses of mobile carriers within two years.

Earlier this month, Apple announced that over three billion mobile apps had been downloaded from its app store. Google's Android platform, meanwhile, is providing an ever lower barrier to entry for app developers to enter the market without having to negotiate with mobile carriers.

Budde said consumers naturally gravitate toward the more open approaches offered by the app stores of their handset manufacturers than the "greedy" efforts of their mobile service provider.

He sees an ominous end in the works for mobile portals. The largest of these in Australia includes Optus' Zoo , Vodafone Live! and Telstra's BigPond Mobile.

"The mobile carriers are fighting a losing battle," Budde said.

"They had ten years to develop a business model that would suit both users and content providers, and because of their greed they failed miserably. Now that the mobile broadband market has finally been broken open, they are no longer in control of the situation."

Budde said that companies like Apple and Google are forcing a "structural separation" between infrastructure and services.

He does not expect content providers to mourn the death of mobile carrier portals.

"Very few of the current independent content providers using the portals of the operators will be sorry to see their demise, despite the fact that this will also mean that they will have to change their own business models," Budde said.

"Currently they are still trapped in the portals as this provides them with the option to bill for their services."

Budde does not expect mobile carriers to succeed in replicating the app stores of handset vendors.

"Following the iPhone phenomenon the carriers are now trying to jump on board and provide their own AppStore for the devices they support, but it is very doubtful that they will have any chance of success in competition with the AppStores of Apple, Google and others," he said.

"It is extraordinary that the operators were able to stand in the way of innovation and competition in this market for so long."