Apple is said to be debuting carrier billing for the iOS App Store in the coming months as an additional way for consumers to purchase apps according to a number of different sources. The scheme supposedly will be rolled out initially through Indosat, Apple’s third carrier partner in Indonesia, which launched the iPhone 4S on its network on Monday.
Unlike in several other countries, iTunes Gift Cards are not available in most Asian countries and PayPal is not accepted by the local App Stores. At the moment the only way for Indonesians to buy apps from the App Store is by using credit cards but the majority of the population do not use banks and the number of credit cards in use is only around 15 million with an average of two cards per person. Since around 80 percent of Indonesia’s mobile subscribers are on prepaid and most do not have credit cards, Apple’s single payment option limits the potential growth of the platform.
Indonesia is home to fewer than a million iOS devices among 15 million smartphones and the country is more known as a BlackBerry country as far as smartphones go. In fact, RIM is working hard to make sure that its devices remain among the top smartphone of choice among Indonesian consumers. The country also has the largest RIM developer community in the world with 488 members in the BlackBerry DevID community, and thousands more unaffiliated according to RIM VP Developer Relations Alec Saunders on Monday at a Mobile Monday event in Jakarta.
Southeast Asia, especially Indonesia, is a strong growth region for the smartphone market as the country has around 200 million mobile subscribers out of 230 million population, and the region is home to more than 400 million people. According to IDC, smartphone shipments in Indonesia grew 28 percent in the last quarter of 2011.
The top five mobile phone brands in the country are Nokia, Cross, Samsung, Mito and RIM. Cross and Mito are local brands focusing purely on feature phones. The opportunity looms for Apple to seize the market but only if it is willing to understand consumer behavior in this country and adapt to it. Currently, that doesn’t seem to be the case.
Sales of the iPhone has been very slow in Indonesia. iPhone 3G did not make it into the country until early 2009 while the 3GS debuted in February 2010 with neither having sold more than 30 thousand units within the first year. iPhone 4 fared much better after it was introduced in December of 2010, just two months after the US release in October, selling as many in less than a quarter. iPhone 4S was launched at the end of January this year on Telkomsel and XL Axiata. If Apple does decide to continue offering iPhone 3GS in developing countries at a lower cost as speculated by AppleInsider last week, Apple’s platform could see a faster uptake.
Carrier billing is a scheme that has been adopted in Indonesia by Nokia and RIM for their respective online stores and is seen as the preferred method of payment by both consumers and operators. It is easier for consumers as all they have to do is make sure that they have enough balance on their phone credits to make their purchases. On the carrier side, it ensures that people will keep purchasing phone credits and it will assist in raising per user revenue which has been dwindling over the years.
Should Apple implement carrier billing, it will be a welcome change to the mobile operators as they will finally receive revenue from app-related activities. Currently Apple splits the 30 percent app revenue share it receives from each app sale with credit card providers and PayPal .