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By Tom Krazit, 6 April 2009 15:27

NEWS

But while RIM, for example, is launching BlackBerry App World with the money flowing outside of the carrier's control through an exclusive relationship with PayPal, co-CEO Jim Balsillie made it clear he would find a way to make sure the carriers have a chance to participate in the billing for those applications. "Different carriers have different billing strategies, so it's quite frankly a bunch of work," he told The Wall Street Journal.

Microsoft is likewise steering a middle ground, with plans to let carriers offer their own "store within a store" inside Windows Marketplace for Mobile and giving users the option to choose how they want to be billed: directly via credit card or through their monthly wireless bill.

The idea that the carrier owns the billing relationship with the end user for almost all of the mobile experience is virtually sacrosanct for everyone but Apple and AT&T. But there is a concern among some in the mobile industry that carriers will extend that relationship to demand a role in creating software and services for end users marked with their own brand.

There are valid reasons why carriers are so concerned about the types of applications that run on their networks. Modern wireless networks are more fragile than people may think, as demonstrated by the problems AT&T encountered when iPhone-bearing attendants descended on Austin, Texas, for SXSW 2009 and brought local AT&T data service to a crawl.

Still, Aaron Woodman, a director in Microsoft's mobile communications business, thinks carriers fundamentally understand the shift that has taken place in the mobile industry over the last several years.

For years, the business of selling mobile phones was about making sure you had phones that looked good and ensuring distribution ran like a clock, Woodman said. But over the last decade, business phone users started to demand features in addition to style, and that trend has exploded with the consumer demand sparked by the iPhone.

Woodman said: "People all of the sudden were walking in and asking for core level of functionality, and that started to change the conversation from about sourcing devices to functionality. That functionality is going to be very difficult for operators to provide with significant help from others. Expertise and experience [in one area] doesn't yield expertise and experience in another area."

Organisations like Symbian, which controls the world's leading smartphone operating system, believe the balanced answer is to create an "app [shopping centre]" rather than an "app store", according to David Wood, executive vice president for research at the Symbian Foundation.

For example, Symbian will do the dirty work of processing, certifying and hosting the applications, but will give its various partners their own storefronts within that shopping centre to sell Symbian-certified applications as they see fit. Microsoft's approach is somewhat similar. This way, carriers can feel they still have the opportunity to sell their software and services to end users without operating system vendors having to cede control of the user experience on a modern smartphone.

As has been often stated, the beauty of the modern mobile computing market is that established business models and philosophies from the PC market or older cellular phone market aren't necessarily relevant: several executives will (privately) admit they are essentially making this up as they go along.

There's little doubt that Apple's iPhone has shaken up this market the way Apple's Macintosh shook up the personal computing market 25 years ago. But unlike the past, several companies - not just two - are going to dictate the future of the truly personal computer.

And since different people want different things from their mobile phones, there's room for more than one approach to selling smartphones and mobile applications. There is not, however, room for seven approaches, which means operating system vendors, handset makers, and carriers will have to be extremely vigilant about evolving customer preferences in a world where consumer tastes can change virtually overnight.