VZW to modernize BREW store

SAN DIEGO — Verizon Wireless (NYSE:VZ, NYSE:VOD) chief marketing officer John Stratton readily admits the operator’s BREW-based Get It Now applications business has underperformed since the industry began focusing on smartphones. At his keynote at Qualcomm’s (NASDAQ:QCOM) Uplinq developer conference, he showed a graph depicting a steady fall-off of feature phone application revenue and downloads since their peak in 2007, despite the facts that VZW’s subscriber base has grown substantially and mobile data demand network-wide has skyrocketed. The trend led Verizon to ask itself a question: “Is this business worth saving?” Stratton said.

Ultimately, VZW determined that it was, but Verizon’s approach to BREW would have to be seriously revamped in order to renew customer interest in the platform and lure back developers. “It was a practical consideration for us,” Stratton said. “There are huge opportunities in the Verizon Wireless base we need to work harder to unleash, to tap into.”

Verizon has set out to modernize its BREW application store and certification process, creating an app outlet for the 56 million VZW subscribers who don’t have smartphones, Stratton said. Its biggest step will be in the launch of its new Open Catalog, developed using Qualcomm’s new BREW Mobile Platform. The Open Catalog will create new billing models for developers, including free apps as well as "freemiums," which allow customers to download a trial or basic version of an app and upgrade to the full paid app later. The catalog will also enable micropayments, allowing customers to purchase upgrades or subscriptions within the applications themselves.

VZW is also trying to eliminate many of the obstacles developers face in getting into the Get It Now store. It’s lowering its certification and testing fees from $550 to $99 and isn’t requiring that developers port their applications to all devices in their portfolio, meaning developers can build more robust applications for high-end or popular feature phones. Stratton said that VZW is also streamlining its certification process, cutting it from the usual month to less than 18 days.

In addition, Verizon plans to give the Get It Now store a face lift and new functionality, after basically leaving the store “frozen in time” since 2005, Stratton said. Besides the redesign, VZW will use Qualcomm’s Xiam technology to improve customer recommendations and search capabilities making developers’ content more discoverable.

The infusion of free apps onto the Get It Now platform could lead to a huge boost in download activity, but Stratton said it will offset those costs by continuing to charge for data. While the download might be free, the bytes consumed by the download will still be charged to a data plan or against a per-megabit billing model.

Stratton said that Verizon Wireless fully expects the smartphone juggernaut to continue, and as smartphones become cheaper they’ll lure away many of the customers VZW is targeting with the new BREW features. But he added that no matter how popular smartphones become there will always be a segment that wants mobile data services and apps but doesn’t want a full-fledged smartphone.

“We need to recognize that [smartphones] won’t get to 100% [of VZW’s subscriber base],” Stratton said. “The feature phone will be a declining part of our future sales, but they’ll still be a pretty big part.”

Developers had mixed reactions to the Open Catalog initiative. Shortly after Stratton’s keynote, during the Wireless Industry Partnership Jam session — essentially an open forum for developers to air their questions and concerns — several developers defended Verizon and BREW, saying the new flexibility in BREW MP and Verizon’s streamlining of the certification process provided the incentive to take a new look at BREW. But many developers pointed out that no matter how much Qualcomm and Verizon tweaked their platforms, they essentially ran a closed shop, while more open platforms like Google’s (NASDAQ:GOOG) Android Market and Apple’s (NASDAQ:AAPL) App Store offered much easier paths to market for their apps as well as a much larger potential market than a single carrier can provide.

Nick Bicanic, CEO of Purpose Wireless, a location-sharing app developer, said that the tide has turned on the operators — rather than developers seeking operators out to find a distribution channel for their apps, operators are now courting developers in an effort to populate their dying app stores with content. If operators like VZW are serious about rejuvenating the feature phone category and re-establishing their themselves as application providers, then they need to fund the creation of BREW themselves, paying for all certification and testing costs, Bicanic said.

But not everyone at the WIP Jam session was entirely ready to dismiss the closed platforms. Developer after developer spoke up about the problems of discoverability in huge app stores like Android and iTunes. The closed model might be limiting in some senses, but some said that being in a more exclusive store where their app was more likely to be found was appealing.

Day 2 of the BREW conference was the 25th anniversary of Qualcomm’s founding, and Qualcomm marked the occasion by honoring Verizon Communications chief technology officer Dick Lynch with a newly created award for wireless innovation. Lynch was the technology vice president and CTO of NYNEX and Bell Atlantic during the transition from analog to digital and became one of the early champions of the CDMA technology that Qualcomm developed.

“I think the Verizon customer today still benefits from the decisions we made back then,” Lynch said upon accepting the award from Irwin Jacobs, Qualcomm’s co-founder and former CEO and chairman. To Jacobs, Lynch added: “You guys started the data revolution in this industry.”