Convergence is changing the internet access market. Consumers increasingly access the internet via both fixed and wireless connections. Mobile operators, fixed internet access providers and cable services providers all find themselves competing for the same customer who is already (or soon will be) consuming any digital content via any device – desktop, notebook, tablet, smartphone and smart TV.

 € 65 million purchases via Internet+ in 2010

Netsize mPayment Internet+ billing enables content providers to benefit from this convergence. Netsize mPayment Internet+ reaches some 40 million users in total, 93% of the Internet population in France. It is available on Alice, Bouygues Telecom, Free, Orange and SFR. A single connection to mPayment allows providers of for example video on demand (football, movies, music) to develop innovative services and monetize their content to the largest possible audience – using mobile and online payment methods.

In 2010, 65 million euros worth of transactions has been billed through Internet+, a growth of 60% from the year before. It is the fastest growing payment method in France.

5 reasons to choose Internet+

1. Cardless payment method
2. 40 million potential users
3. Accellerating adoption
4. 82% conversion ratio
5. One-shot, pay-per-use as well as subscription models

With Netsize mPayment, you quickly deploy Internet+ as well as all available carrier billing methods in your web store and mobile stores. Convenience for your customers, revenues for your business.

It was a small sentence that caught my attention in the news. The average hourly rate for  a freelance mobile app developer in 2011 has dropped by almost half (!), down to 49 euros from 100 euros a year ago (source: FreelanceMatch.nl). According to a commentary, one of the reasons behind this this decline is the explosive growth of supply of mobile app developers, many of whom had to lower their rates to stay competitive.

Demand and supply

In the past two years the output of mobile app developers has been nothing less than phenomenal. The Apple iTunes app store currently carries 392,871 apps, and Google Android Market is closing in with 190,067 apps in store. These counts are taken from our latest report Netsize Application Store Billing, available as a free download from www.netsize.com.

The appetite for apps is not likely to level off soon. Smartphone sales are accelerating globally and all smartphone users are app-hungry. In fact, the abundance of apps – entertaining or professional, useful or useless – might also be the driver behind the massive increase in smartphone demand. This is certainly the view of device manufacturers. All handset vendors already have or will soon launch their own app store as part of a compelling offer in a smartphone market that is heating up.

Where is your app?

But where does that leave the struggling developer? An hourly rate of 49 euros doesn’t deliver that nice sports car. Clearly, the only way to earn that kind of money is to choose creative business model that delivers.

As in all retail, distribution is a key factor.  There certainly is not shortage of app storefronts to choose from.  The Wireless Industry Partnership (WIP) already counts 120 active application stores of all sorts and sizes in their latest survey. This certainly doesn’t make it easier for developers to pick the one(s) right for them.

How about reach? In the Netsize report, iTunes ranks number 6 in our ranking by number of apps in store. Android Market takes the number 11 spot. Both definitely attract a lot of visits, and other research has shown that a presence on iTunes is a must if developers want to increase exposure and revenues for their apps.

All other application stores listed in the top 15 are independent, meaning they are not limited to any one platform, operating system, device brand or mobile network operator in particular. These stores aim to be a one-stop portal for users to find and download apps. The number of apps on offer via these stores can reach a mind boggling 700,000. A closer examination reveals two categories of app store: application directories and independent app stores. It is an important distinction that matters a lot if you want to make money and get users to come back for more.

The last mile

App directories such as Appitalism, Chomp, Appolicious and AppStoreHQ aggregate content from app stores such as iTunes and Android Market to promote and re-merchandise it. Thus, app directories don’t host the apps. Their key focus and strength is to make it easy for users to search and discover apps. What’s more, there is little difference between the directories. They are effectively lookalikes, competing on the sheer number of apps referenced in their storefronts.

Put another way, these directories are not app stores in the proper sense. Users may choose the app they want here, but it’s not where they actually buy it. Instead, the user’s browser is directed to the hosting store. Directories lack the view of that all-important “last mile”.

Making money from apps has become a numbers game. Developers therefore need tools that provide them insight into their apps´ commercial performance and opportunities for cross-sell and up-sell based on detailed information about their customer base. This is where independent app stores such as GetJar come in. In addition to hosting the actual app, these stores also provide mobile analytics and other tools that can help developers to better merchandise and monetize their applications.

Discovery is good, billing is better

Developers can’t sell what users can’t find. So, naturally, being found is an important aspect of running an app business.

Knowing where and how to spend your marketing funds effectively is at least as important, if not more. But the end goal is to build revenues and a sustainable business. For developers being able to charge users and take advantage of the window of opportunity that opens at the moment of the impulse buy is critical.

This is why application stores are implementing mobile operator billing, providing end-users with an easy to use and trustworthy method of payment that can be used for “on mobile” and online transactions alike. Users can even make a purchase from inside the app, a payment mechanism known as in-app billing. This approach allows developers to charge for additional features and functionality (such as a move to another level in a mobile game), allowing developers to monetize their app and build stickiness.

Developers and app publishers make their money in this last mile and should make use of the analytics tools and payment approaches available on the market. Even as the initial costs to create an app go down (and with it their hourly rate), they can make up for the losses by choosing the right route to market. Picking the right app store is key to make a profitable business out of apps. You might be able to afford that fancy sports car after all.

First published May 2010, and fully updated in June 2011, Application Store Billing report is the first report to identify and document the characteristics of a winning and competitive app store. This is echoed in the foreword provided by Wireless Industry Partnership (WIP), publisher of the WIP App Store Catalog, the most comprehensive listing of mobile app stores available.

Analyzing business models, the report identifies these key characteristics:

• Convenience (discoverability and finding everything in one place), compatibility (apps specific to the device), choice (a wide selection to choose from) and ease of payment are the key criteria that make app stores a destination for end users
• Global reach, a solid infrastructure including flexible payment systems, analytics and merchandizing tools, and an app store´s marketing power are the key enablers for app developer success

The report incorporates latest analysis of emerging mobile device ecosystems and application store trends, drawing from research by ABI Research, Chetan Sharma Consulting, Deutsche Bank, Juniper Research and VisionMobile, as well as the Netsize mobile market trend survey.

Application Store Billing report also contains fully updated Netsize rankings of top-70 application stores, including ranking by app store type (platform, device, operator, independent, directory) and app type (free apps, paid apps, total apps).

The report is available as a free download from www.netsize.com.

Retailers are waking up to the imperative to harness mobile – as they did the Internet – to interact efficiently and effectively with their customers. The end-game is no longer about enabling one-off interactions that result in the sale of goods and services. The winning approach is the one that turns a transaction into a customer conversation.

Against this backdrop, an effective mobile payment system must do much more than manage and enable transactions. It must also enable the retailer to communicate with its customers and build mutually profitable relationships.

Customer Relationship Management (CRM) takes a central role in strategies aimed at optimizing customer relationships to boost both business profitability and customer satisfaction.

After all, it costs much more to acquire new customers than it does to sell (again) to existing ones. Delight the customer? Mobile brings a new dimension – and a new immediacy – to this best practice.

What can a mobile payment solution do to enable online retailers to implement an efficient CRM strategy using mobile?

Let´s analyze the case of MPME: pay with your mobile in France.

MPME (Mobile Payment & Mobile Enablers) is a new scheme focused on enabling and enhancing remote mobile payment in France. The solution, which launched last year, allows customers to pays for low-cost items using their mobile phone.

Using Netsize´s platform for mobile payments, mPayment with MPME – which runs on the mobile Web and across Wi-Fi networks – retailers can easily add mobile payments on their online and mobile web and WAP store fronts.

In practice, MPME ensures that consumers can make a payment using their mobile phone without revealing their mobile subscriber number.

This is unlike, for example, Payforit, the framework for carrier-billed mobile payment in the United Kingdom, that does pass on the mobile subscriber number to the merchant.

Instead, MPME provides each consumer a unique ID number, a classification that allows the retailer to recognize the customer again without having to know the customer’s precise mobile subscriber number.

Knowing how to serve

The benefits are two-fold. For retailers, the solution allows them to collect key customer insights (such as past purchases) that will enable them to better know and serve their customers.

Building up knowledge of what customers prefer and purchase over time is key when the goal is encouraging repeat buys and long-term customer loyalty.

For consumers, the pay-off is all about convenience. Retailers – because they can make the connection between the transaction made and the customer who made it – have a much clearer idea of what goods and services would likely appeal to a particular customer. Additionally, retailers can also identify and reward return customers.

Since data is collected and enriched using a unique ID number, customers don’t have to be worried about privacy concerns. The retailer doesn’t know exactly who the consumer is; they just know how to serve her best.

Transaction follows conversation follows transaction follows …

But the interaction doesn’t stop there. Beyond enabling payment, Netsize mPayment with MPME also allows merchants and retailers to connect and communicate with their customers.

Specifically, this solution enables merchants to carry on a conversation, sending SMS text messages that are delivered to each customer’s unique MPME identification.

More importantly, this CRM approach also encourages customers to answer back. In practice, users can simply send a text to the merchant´s mobile service to reply to offers, ask for more product information or just react to a merchant’s call to action.

The result: a form of valuable and effective two-way text communication that allows retailers to better serve their customers – and encourages consumers to respond to the messages they receive.

Service discovery and promotion with MPME

The loop feeds back

Thus, the discussion (and the relationship) can continue long after the consumer has made a purchase in the online store, mobile storefront, or via a mobile application.

It’s easy to imagine scenarios where the merchant can use this solution to text consumers and inform them about similar deals, new products and services, or simply ask permission to follow-up with alters announcements or newsletter updates.

Indeed, merchants and retailers can use the solution to send text messages to customers who are likely to respond based on their past purchasing behavior.

This feedback loop opens the door to a multitude of cross-sell and up-sell opportunities because it helps the merchant to develop (and deliver) services that are relevant, valuable, and sure to retain and grow the customer base.

And isn’t this the goal of CRM in the first place?

More on Mobile Payments & Mobile Enablers: Association Française du Multimédia Mobile AFMM (www.afmm.fr)
More on Payforit: www.payforituk.com

It is with great pleasure that we present to you a brand new edition of the Netsize Guide 2010, Mobile Renaissance. For the first time in its 9-year history the book is now updated in its publication year with five new interviews and hot new 2010 telecommunications market data. We´ve kept the original 2009 data, providing you with a unique quarterly view on the mobile telecommunications market trend in 40 countries globally.

Download the Netsize Guide 2010 Updated Edition

Share with us your opinion of the Netsize Guide. Please take a moment to take part in our Netsize Guide reader survey. The questionnaire will take a few minutes to complete. Your feedback will help us to stay focused on what matters to you.

Take the Netsize Guide reader survey

We´d also like to stay in touch with you via social media. Follow @NetsizeCorp and @NetsizeGuide on Twitter. You can also visit our Netsize Guide microsites – Mobile Renaissance and the Netsize briefing room on MSearchGroove – where you are welcome to post your suggestions regarding new topics and trends you feel we should explore in the Netsize Guide.

We are confident you will benefit from the content and case studies we are covering in our upcoming projects, and we look forward to learning what content and companies you would appreciate most.

Drawing from a survey of 1,000+ mobile professionals and practitioners across 67 countries, the report concludes that credit card billing is by no means the way to reach a large and global audience.

The survey found that 85 percent of respondents indicated that operator billing is a key enabler, 39 percent also included credit cards in the mix. A me-too application storefront modeled on the Apple blueprint is not enough.

Payment methods with greatest growth of importance in next five years

The increasing importance of mobile billing schemes relative to credit cards concurs with the findings of Edgar Dunn & Company 2009 Global Payment Trends Survey.

Payment professionals indicated that contactless cards, remote mobile payments and, to a lesser extent, prepaid card products will gain the most importance in the coming 5 years. See chart 1.

In another study, Edgar Dunn & Company identified younger consumers (18 to 30 years old) as the most interested in such alternative payment products, followed by eBay sellers, convenience seekers, and users without access to credit. See chart 2.

Which customer segment is more receptive to alternative payment products

In its 2009 annual report eBay noted that in 2009, more
than $600 million worth of sales were transacted through its mobile applications.

The success of mobile payments relies on speed, convenience and trustworthiness. These are the key enablers “sine qua non”.

Merchants will not implement a new payment mechanism if implementation costs are high, consumer awareness is low and it carries risks of chargebacks, according to the same report.

The good news is that around the world the industry – meaning, mobile network operators, financial institutions, industry regulators and government bodies – are collaborating to ensure that mobile payments will be just that: upright, unfailing and ubiquitous, and a solid alternative to established online payment methods.

Payforit in the United Kingdom is a striking example of a payment method that has made the leap forward from a mobile web-only scheme to the Internet and mobile web at large – be it in the UK, for now.

Online stores and retailers, whether selling “just apps” or more, should look beyond the card.

Referenced reports:

Paris, July 19, 2010 — Netsize, the leading mobile commerce and communications enabler, today announced the key to unlocking micropayments online: Netsize mPayment with Payforit version 3.

Click image to view mPayment with Payforit v3 product details

For the first time UK consumers will have a simple, straightforward and trustworthy route to buy digital as well as physical goods and services. Consumers can make transactions online and via WAP using any mobile phone. Merchants benefit via a simplified route to market that accelerates ARPU.

Payforit v3 offers trust, convenience and ease of use. It is supported by all mobile network operators in the UK. Payforit enables consumers to make online purchases from their PC or mobile phone and securely charge the payment amounts to their phone bill. Payforit v3 supports payments from all mobile devices, including WiFi-connected phones.

Netsize mPayment enables Payforit on Web, WAP and Web Lite transactions and also supports single click purchases and subscription services billing with Payforit.

“Netsize mPayment with Payforit v3 provides merchants with a ‘country on a plate’”, says Stanislas Chesnais, Chief Executive Offer, Netsize. “Now merchants can easily start with mobile payments in the UK and focus on promoting their offer, while mPayment with Payforit handles the technical complexities and helps ensure regulatory compliance.”

mPayment with Payforit offers merchants increased pricing flexibility. The easy check-out process significantly improves the rate of successful transactions. The number of clicks and keystrokes needed to make a payment is reduced by more than 50 percent compared to credit cards.

As SMS payment for web based transactions is now not allowed in the UK cross-network, Payforit v3 is the single mobile payment alternative available to merchants, offering a superior user experience.

“For the first time, merchants can take advantage of a mobile payment product in the UK that is secure, easy to use and offers payout rates similar to cards. mPayment with Payforit v3 enables them to do business online with consumers who have no credit card, debit card or PayPal account,” Stanislas Chesnais adds. “Payforit v3 has the potential to expand the UK market. It marks an important step towards an m-commerce economy.”

Visit www.netsize.com for more information about Netsize mPayment with Payforit v3, and sign up for a trial account.

Every month some 10 new application stores are opening up shop. To date at least 75 app stores are live globally, ranging in size from large (over 200,000 apps in store) to small (just a few hundreds of apps).

The big questions that app stores and app developers are currently facing is how to build a commercially successful business and what are the winning business models.

In its whitepaper “A World of Apps”, Juniper Research estimates the global market for apps to grow to $32 billion in 2015.

“Application Store Billing”, a report by Netsize published May 2010, analyses the wave of recent app store developments and shows providers will need to develop much more than a me-too application storefront modeled on the Apple blueprint.

The report, containing an overview of the top-52 application stores, is available as free download from www.netsize.com.

Mobile World Congress, Barcelona, February 15, 2010
Netsize, the leading communications and commerce enabler, today launch Netsize Direct Billing, the unique managed Direct Billing solution for Mobile Network Operators.

Direct Billing is a billing method that charges mobile payment amounts directly to the end user’s mobile phone subscription. It does not require intermediate WAP pages or premium SMS.

Netsize Direct Billing provides mobile operators with a direct billing solution that integrates seamlessly with their billing platform. It is provided as a fully managed service that minimizes the mobile operator’s time and resources that would be required to deploy a direct billing offer. In addition Netsize provide a direct billing API that enables third parties to launch mobile commerce services.

“As a relatively new billing method, Direct Billing delivers operators tremendous benefits for launching mobile commerce services, including ticketing and money transfer,” says Stanislas Chesnais, Chief Executive Officer, Netsize. “We estimate that operators would need a year to launch an in-house developed direct billing offer. Netsize Direct Billing shortens their time-to-market significantly to a few weeks, enabling the operator to catch the mobile commerce wave now.”

“Netsize Direct Billing is the first offer that springs from the Gemalto investment in Netsize,” says Jean-François Schreiber, Senior Vice President, Telecom Solutions and Services, Gemalto. “Gemalto’s worldwide presence enables Netsize to venture into new regions and provide operator groups with a common global platform.”

Netsize provide operator direct billing solutions to most of the large mobile device vendors for their application stores. Netsize is global leader for third party direct billing.

Netsize present Direct Billing at Mobile World Congress, Barcelona, Spain, 15-18 February 2010, at stand 2.G51 in Hall 2.

Netsize, a leading mobile commerce and communications enabler, today revealed the first results of the Mobile Trends Survey 2010. Drawing from an online survey of 1,000+ professionals and practitioners, the survey provides insights into key trends that top the industry agenda, including the advance of mobile applications stores, progress towards global mobile commerce and the pivotal importance of mobile as a means to bridge our virtual and physical worlds.

Using the occasion of M-Days – one of Europe’s biggest mobile industry events and exhibitions held in Munich, Germany – Netsize provided conference attendees, industry influencers and key bloggers a sneak peek into the controversial survey results, starting with respondents’ views on app store leaders and the enablers that give them and their offers the competitive edge.

According to the survey, the vast majority (87 percent) of respondents believe the Apple App Store will be the most successful app store in the mobile space. Google’s Android Market is a distant second (60 percent), followed by Nokia’s Ovi Store (30 percent) and RIM’s BlackBerry App World (27 percent). Surprisingly, applications stores run by mobile operators finished low in the list, indicating that platform providers and handset makers may well dominate the space for a time to come.

When asked to rate the unique selling proposition of application stores over other software distribution and sales channels, 65 percent of respondents put convenience (“everything in one place”) at the top of the list. This was followed by compatibility “software applications specific to the device”), choice (“a long tail of thousands of applications to choose from”), and ease of payment (“operator billing, for example”).

Netsize, provider of operator billing solutions to most of the large mobile device vendors for their application stores, released the application store survey findings to the stage for a lively discussion of the future of mobile and the role of software application stores during “Mobile Trends 2020, Mobile Research and App-Commerce: What Comes Next in Europe?” The M-Days session was led and moderated by Peggy Anne Salz, mobile thought leader and MSearchGroove Founder and Chief Analyst.

The complete mobile trends survey results – which cover topics related to mobile entertainment, mobile marketing, mobile commerce, mobile payments and mobile convergence – will be released as part of the Netsize Guide 2010, a comprehensive mobile industry analysis and almanac published by Netsize and written by MSearchGroove’s Salz. Netsize will launch the Netsize Guide 2010 on February 16, 2010 at Mobile World Congress in Barcelona, Spain.