May 12, 2009 / 8:11 AM / 10 years ago

UPDATE 3-Vodafone to open network to application developers

* Launches revenue-sharing application store

* To be available on all Vodafone devices

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By Kate Holton

LONDON, May 12 (Reuters) - Vodafone (VOD.L), the world’s largest mobile operator by revenue, plans to launch a mobile online store to sell games, news and travel applications that its customers can use on any phone.

Following the runaway success of Apple’s (AAPL.O) AppStore, Vodafone said on Tuesday it would launch software to allow content partners and developers to create Web applications that could be used across its entire range of phones to reach millions of customers.

The developers will be able to charge for the applications directly through Vodafone’s billing system and will get a 70 percent revenue share.

The first applications will be available towards the end of the year in the UK, Italy, Germany, Spain, Netherlands, Greece, Portugal and Ireland and Vodafone said it expected to expand the service in the future.

As phone makers and operators search for ways to stimulate demand and differentiate themselves in a saturated market, software that is easy and inexpensive to access has proven popular.

Apple’s AppStore lets iPhone users download thousands of small software programmes that personalise the way they play games, get directions and listen to music.

It said in April that customers had downloaded 1 billion applications in just nine months.

After witnessing the huge Apple success, mobile groups, including market leaders Nokia NOK1V.HE, Microsoft (MSFT.O) Blackberry RIM.TO and others, have raced to launch their own software stores this year.

HUGE FOOTPRINT

Analysts said Vodafone’s offering would be attractive to developers as it offers such a huge footprint across different handsets and geographies.

“Vodafone has several hundred million customers, a huge footprint,” Daiwa analyst Michael Kovacocy told Reuters.

“It is trying to develop an application ecosystem and there should be more than enough developers out there who would want to (reach) a substantial portion of the Vodafone base.”

Kovacocy said the fact the developer would only have to make an application once which could then be used on all devices would reduce costs and the need for multiple contracts for developers.

But he also questioned whether users on basic handsets would be interested in the applications given potential issues with ease of use.

Analyst Geoff Blaber of CCS Insight also pointed out that developers were more used to working with handset makers and questioned whether smaller developers could afford to work with so many players in the sector.

But he said Vodafone’s size and potential consumer base would make it a very attractive proposition.

Under the proposal, Vodafone said their content partners and developers would also get access to its network capabilities, such as location services, to offer a wider choice of services such as getting directions.

The company also said it would work to give access to up to 1 billion customers through its partner networks, which include Verizon Wireless in the United States and China Mobile (0941.HK).

Vodafone customers who have handsets that already offer applications, such as the soon-to-be launched Nokia service, will be able to choose which system they use.

Vodafone said Apple could decide to reject its new service on the iPhone but hoped the scale of its offering would prove too attractive.

Research firm Strategy Analytics in its latest forecasts states that the value of the mobile content market — including downloadable games, ringtones, wallpapers, video, mobile TV, text alerts and mobile Web browsing — would grow 15 percent to $62 billion this year. (Reporting by Kate Holton; editing by Karen Foster and David Cowell)

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