OEMs should consider selling their apps on the Play Store

By | 26th February 2018

It’s no secret global smartphone hardware shipments are plateauing. Customers are keeping their phones for longer each year and a number of high-caliber manufacturers’ finances are being squeezed. It’s not a great time to be a mid-tier player in the hardware game, but software revenue from the Google Play Store continues to increase year-on-year.

Maybe the big-brand OEMs should start paying more attention to the lucrative software market to prop up their balance sheets. The easiest way to do that would be to list their in-house apps on the Play Store. Many companies are already doing this, like Samsung, with its Health and Internet Browser apps, and BlackBerry’s Messenger. Cross-OEM customers also probably wouldn’t mind getting their hands on a lot of those exclusive apps, like Sony’s Music/Walkman app, Google’s Pixel Camera, or Moto Actions, to name a few.

The consumer benefits are obvious; a wider range of very high quality apps to pick from is a big win. We would only have to spend a few dollars for the software we like rather than hundreds for an OEM’s hardware and software package. Offerings from bigger OEMs could also help drive up the quality of third-party apps. How much we are willing to pay for these apps, and if OEMs would disadvantage their own businesses by removing this element of exclusivity is the more pertinent question.

Trading market shares

OEMs have been reluctant to see things this way so far for obvious reasons. Why allow customers who shop with your hardware rivals to benefit from your proprietary apps? Why sell software for $5 when you can sell a phone for $800 or more? Won’t it dent a hardware brand if it becomes seen as a software focused company?

These are reasonable assumptions, but there’s little evidence to suggest consumers are buying smartphones just for specific pieces of software — this tends to be more of an influencer on ecosystem choice (Android or iOS), rather than for exact models. Research suggests better battery life is still the number one reason for upgrading to a new phone. Photography, sluggish performance, and even waterproofing also rate highly, but individual apps never seem to register in any significant number.

Rather than diluting smartphone selling points, bringing more customers into an app ecosystem is beneficial for brand awareness.

We’re not counting out the appeal of familiar software on purchasing and upgrading habits. After all those who become very used to the way Samsung organizes and flavors its software don’t tend to get on as well with stock Android, and vice versa. This tends to be more of an OS or suite issue, rather than something tied specifically to a single piece of software or a service.

What OEMs may not be considering is that apps and services are very good at building brand awareness. If you’ve become a regular user of an inexpensive Sony Walkman app or Google’s Camera, you might be more tempted to buy hardware from the company in the future, simply because of good past experiences with the brand. At the very least, you want to pick up something else from the company’s software suite.

It’s almost like there’s some unspoken truce where all the OEMs simply don’t compete with each other’s software. If OEM X offers a better email app than anyone else, they have nothing to lose by letting everyone buy it. Imagine a situation where customers ditch pre-installed apps for better competitor alternatives, that’s bound to translate into hardware sales. OEMs need more confidence in their software.

It's almost as if OEMs are engaged in some unspoken software truce.

BBM – a case study

BlackBerry is perhaps a textbook example to examine in more detail. The company opened up its much coveted BlackBerry Messenger app to all Android and iOS users back in 2013, ahead of its Android hardware debut with the Priv in 2015.

In the short term, the number of active BBM users rose from 80 to 91 million in just a year, gaining the company notable publicity. The company’s Android smartphones, though not game changing, sold as well as anyone expected, due at least in some part to the sustained brand recognition generated by BBM. Today, BBM languishes behind its messenger rivals on some 63 million active users, but it served its purpose and gained the company plenty of reach with a minimal advertising budget.

Editor's Pick

We shouldn’t just look at BBM in isolation though. The company has shifted from being a proprietary software company to an open one across a range of products. As well as its messenger, BlackBerry now sells its suite of enterprise and security applications to customers across platforms. This includes Security and Hub+ apps on Android, as well as wearables, enterprise, and transport solutions. The company generated a net income of $19 million its latest quarterly report, compared to a loss of $372 million the year before. This was led by software and services revenue at $196 million, 26 percent higher than in 2016. Software is saving BlackBerry.

Apps VS services

Whether or not the BlackBerry example would work for other OEMs isn’t clear, given the company’s unique enterprise history. Many essential applications, like music players and messengers, already have well-established third-party players which would be tough to supplant. LG suddenly coming out with a messaging app would be a pretty meaningless endeavor when so many great ones already exist. The key takeaway from the BlackBerry example is that finding a suitable service niche is the key to longer-term software success.

Google is another prime example, it’s Docs, Sheets, Slides, and Photos applications are useful on their own, but tie conveniently into Drive, which eventually encourages heavy users to pay to expand their cloud storage capacity. Many would like to see the Google Camera app on other devices for its photography brilliance, and Google could certainly look to monetize this through integration with Photos. HTC potentially missed out here with its Zoe camera app a few years back.

Sony is another example but seems to lack ambition. The company utilizes its media empire to offer film through its PlayStation Video app, but why this is tied an marketed so closely to PlayStation, without embracing broader mobile streaming and the casting trend, isn’t clear. Open it up. Give Netflix a run for its money. Keeping its 3D Creator app an Xperia exclusive seems equally odd when you consider the company could be making a bigger play for the AR content market. Even the company’s customizable theming engine could be put to put to commercial use given the right mindset.

Linking apps to useful services is a more powerful tool than realizing a stand-alone app that could be easily imitated.

Samsung Pay is another good example of a service other customers would probably like to use, especially given that Google Pay (formerly Android Pay) was a melting pot of payment and reward ideas.

Not all of the best OEM apps lend themselves to bigger services. Many probably wouldn’t mind getting their hands on Moto Actions, Huawei or LG’s manual camera options, email apps, music and video players, or various launchers too. The growing market for Chromebooks, which predominantly only ship with Google apps, are also crying out for more professional entertainment and productivity apps.

There’s plenty of wiggle room for business models here as well. Upfront or subscription based would both be viable, and OEMs can always retain a unique selling point for their smartphones by offering apps or services for free when you buy one of their handsets.

Wrapping up

There’s a lot to consider here. Pros and cons definitely apply quite differently depending on how influential a company is in the smartphone market. We saw a split opinion when we asked the same question in a recent Twitter poll. Our poll ended up just favoring “No,” but 44 percent interest in purchasing OEM apps isn’t easy to dismiss.

Even though OEMs’ apps might not pique universal consumer interest, there’s a notable market out there for big name software developers to sell their wares to the bigger Android ecosystem. One or two of them might want to consider the mostly untapped market for high profile software, especially if they’re struggling to sell hardware.