GetJar: Operators have lost the consumer
Prepping for his keynote at Mobile Connections next week, GetJar CEO Ilja Laurs discusses how operators have been marginalized by their customers when it comes to mobile apps and how there’s little hope of getting them back
Is there any hope for the wireless network operator in this strange frightening new world of over-the-top mobile apps and services? GetJar CEO and founder Ilja Laurs used to think so, but now he thinks very differently. After years of working with operators to provide an alternate app store to those of the big platform providers, Laurs has arrived at the opinion that operators have absolutely no influence over their customers when it comes to where they go on the mobile Web and what they download. “Essentially,” Laurs said, “their customers are ignoring them.”
Ouch. It’s a hard truth, but maybe it’s one operators need to hear. And Laurs is in a position to tell them, considering how he had managed to build a thriving application portal independent of Google (NASDAQ:GOOG), Apple (NASDAQ:AAPL), Research in Motion (NASDAQ:RIMM) and Nokia (NYSE:NOK). The GetJar storefront is handling more than 100 million app downloads a month, which could make it the second most trafficked store on the mobile Internet behind iTunes (Android Market doesn’t release numbers).
Laurs may not find a very receptive audience in an operator community that’s used to doing things its own way, but he’s likely to find an eager crowd next week in Las Vegas at Mobile Connections, a cross-platform mobile developer conference hosted by our sister publication Windows IT Pro. Laurs will deliver the Wednesday keynote address on the third day of the conference, and on Monday I sat down with him to talk about what he plans to tell those folks. Laurs said he would use the podium to advise developers on what kind of business models they should to monetize their apps—whether via direct payment, in-app advertising or virtual goods. One thing is fairly certain though, Laurs won’t be advising developers to partner with operators if they expect to make any money.
Laurs isn’t just spouting the usual carrier trash talk like many developers out there. GetJar has signed revenue share and promotion agreements with more than 50 operators globally. The benefit for both parties would appear to be obvious. GetJar has an open app store which spans the Android, BlackBerry, Symbian and even feature phone platforms. Developers are free to submit apps and use whatever payment system they choose—GetJar collects nothing off the top. Instead, it makes its money on discovery, modeling its platform off Google’s AdWords: developers can bid on keywords searches, making their apps easier to find. Laurs said 15% of all GetJar downloads come from sponsored results, while the remainder are all from organic searches, which is plenty to make GetJar’s business model viable. Of that revenue, GetJar splits it with the operator where they have an agreement in place.
Everybody wins right? Developers get a free and open domain to distribute their content, paying only for better exposure, while operators get a revenue-generating app store that they can brand and promote as an alternative to Android Market or BlackBerry App World (GetJar can’t support iPhone downloads on un-jailbroken phones). But here’s the rub. After years of these deals with some of the world’s biggest operators—AT&T (NYSE:T), Sprint (NYSE:S) and Vodafone (NYSE:VOD) to name a few—carrier-driven downloads account for only 10% of all downloads. That’s total downloads, not revenue, Laurs said.
Meanwhile, GetJar’s direct-to-consumer business is booming to the point that it has almost completely written off the carrier partnership completely. “Once we realized this wasn’t a fast way to scale, we gave up on it,” Laurs said. “We still have those deals in place, but we don’t promote the opportunity at all anymore. … We learned that it would take 1000 carrier deals to double our profits. The return on investment is way less than our direct-to-consumer effort.”
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