App makers struggle to profit from open platform

(Ecns.cn) – China has the second-highest number of iOS app downloads in the world, right behind the US, but ranks only eighth in total revenue generated from downloads, according to App Annie, a Beijing-based app-store analytics firm.

Due to piracy problems, every iOS app downloaded by a Chinese iPhone user generates an average of about US$0.03, only one tenth of the average $0.28 in the US.

Not surprisingly, many Chinese app developers are growing impatient with the domestic market and looking to cash in on overseas users.

Under such circumstances, domestic mobile and Internet service portals have become more determined to strengthen their open platforms and attract top app developers.

Mobile operators uncertain

Last month, more than 200 companies attended the Mobile Asia Expo in Shanghai, where three influential mobile operators and phone makers – China Mobile, Nokia and Blackberry – vied for the attention of China's one million app developers.

According to the National Business Daily, most utilitarian app developers rushed into China Mobile's conference room that day, as they regarded the other two companies as outdated and in decline.

Nokia and Blackberry are gradually losing their dominance in the market, but China Mobile is still growing well, although it hasn't made that many groundbreaking achievements, said Mr. Gao, who works for QTT, Omnitel China.

QTT, which is closely connected to mobile operators, is now developing third-party apps for China Mobile, added Gao, and music, video and books are the most profitable areas for the company.

Gao is not satisfied with current profits, however, as QTT once earned hundreds of thousands of yuan every month, but now makes little more than 10,000 a month.

Compared to Nokia and Blackberry, China Mobile's app store is developing rapidly, but it does not bring increasing profits for developers, said an insider.

Launched in August 2009, China Mobile's app store now has more than 200 million subscribers, with daily downloads topping out at 2 million. But the store's success is mainly reflected in its number of apps, not profitability for developers.

Mobile network operators China Unicom and China Telecom have also launched open platforms, but their performances have been less than satisfactory, partly because their users are not as willing to spend money on apps, says the National Business Daily.

But this is only the beginning of the open platform era, so there are problems to be tackled but also opportunities for further development, said Fang Xingdong, a Chinese Web entrepreneur who hopes that mobile operators will continue to adapt.

Succeeding where others fail

Large Internet companies have been relatively successful in the open platform business, and their app developers can earn more money if their products are well received, according to the National Business Daily.

Service portal Tencent is one that has performed well. Last year, it launched the Q+ open platform, which offers some of QQ's core functions such as file transferring, content sharing, and video and audio chatting.

Tencent also has other open platforms, and with over 650 million active users and 400,000 app developers, the company has built a tremendous and profitable Internet ecosystem.

Web services company Baidu has also been doing well in the field. It has provided an effective open platform for app developers whose profits reached over 100 million yuan (US$15.7 million) in 2011, a figure that will probably triple this year.

All app developers need platforms with sound user bases and steady network traffic to attract the attention of advertisers, experts say.

No matter what the policy is, an open platform will not survive unless it can benefit app developers with reasonable profits, said famous IT commentator Liu Xingliang.

Apple bangs on the door

Apple's iOS market in China grew 17.3 percent in the June quarter, a significant increase from the 9.9 percent share the company had just a year ago.

The rise in iOS market share hasn't pushed the platform much closer to Google's Android, but it has exerted some pressure, especially since Nokia only has an 11.2 percent share of the market.

Moreover, the iOS platform has already become a powerful competitor for mobile operators and Internet giants, as many app developers are joining its side, says the National Business Daily.

But it also faces a major problem: piracy. China is the biggest market for "jailbreak," a process which allows people to install paid apps for free, making them much more difficult to sell.