Monetizing App Services with PaaS

The worlds of consumer apps and cloud computing will converge for service providers.   Most consumers “downstream” in the apps value network care less about techno cloud talk, they just want a personalized, reliable, inexpensive, and simple experience on their various screens and devices.  Yet, on the upstream side of the service provider's business model, app providers (and the technical developers that make them) are increasingly needing services from the cloud.  It's at this point that app development people and making important “wiring” and purchasing decisions, as customers (not supplier/partners).  The cloud computing sector’s “SPI model” includes an important model concept called PaaS, or Platform as a Service (PaaS) that has vital implications to capturing demand for new communications services on the web.

Today’s article from the Economist on mobile apps on their own raises again an important question about the business and shareholder value of retail apps distribution.  As reinforced by TM Forum’s Insights Research done earlier this year, the key retail business benefit of apps distribution is improved end user experience and loyalty benefits compared to not having a branded and integrated app store at all.  But, apps very well may be a loss leader product (possibly profitable, but margin diluting) from a retail distribution perspective.

Cloud computing providers realize that getting apps development into their clouds and tools (SDKs) is a synergistic strategy to sell operational services to support and run the apps functionality.  That’s not just for app hosting, but includes the micro-services that apps consume like cloud storage, ad placements, and mashups (network-based location, charging, etc.).   Many of these web-based micro services are not generally free either, and have real demand and revenue potential.  PaaS models go further to attract the actual app software development and service consumption into an integrated app software development, deployment, and operational environment.  It’s in this full cycle approach that open API services demand and monetized market share will be built.  The TM Forum’s Service Delivery Framework (SDF) takes a full lifecycle approach in its reference architecture and identified interfaces to support both development and management new services and seems well suited for PaaS environments.

I’m pleased to announce the TM Forum’s kickoff of an interest group for collaborating on best practices for app stores and distribution.  Our first call will be on Tuesday, July 13th at 9:00AM ET.  Any member of the TM Forum can join.  More details are found in our online community for Content & Apps Value Chains (member log-in needed).