Three reasons why Verizon's app store doesn't threaten Apple

Telecom giant Verizon (VZ) announced today it will start offering software applications thorough its new online store, aping Apple (AAPL)'s iTunes strategy.

These applications would initially be usable on TVs connected to PCs or to the internet. The store will deliver Twitter, Facebook, and other popular free web and mobile applications to Verizon customers over its FiOS fiber-optic network, the service that provides voice, data, and TV to millions of subscribers. Verizon also plans to offer 75,000 Internet videos from providers like Veoh Networks and Verizon said it might use FiOS to deliver content to such devices as laptops and smartphones.

Verizon's announcement has been spun be the first real threat to Apple's hegemony in the application-store model. Apple has largely failed to ignite the same fire in the video and TV markets as the audio market; its Apple TV product got a lukewarm reception. But an app store from Verizon should hardly strike fear in the hearts of Apple's executives. Here are three reasons why Verizon is no threat as yet.

1. Phone and cable companies are notoriously bad at user interface. One key reason for the iPhone's ascendance is the inability of cell-phone carriers and traditional phone makers to build easy-to-use interfaces. (Blackberry and Palm Pre are exceptions, but these smartphone marketers are distinct from traditional phone carriers and handset makers.) The iTunes App Store is hardly a simple thing to pull off. And without that, nothing Verizon does will work.

2.The real key is supply mobile apps. Other apps, delivered over the Internet, will not differentiate Verizon's FiOS experience from anything else. Because mobile apps are the main draw for the iPhone, they're the price of entry for any other real app store. But enticing developers to supply apps to a Verizon applications store will be difficult. Verizon will have to match or beat Apple's revenue-sharing arrangement, which gives 70 percent of every purchase to developers, software companies, and content providers. And Verizon will have to standardize to one type of mobile-operating system if it hopes to get developers to build thousands of applications for mobile devices that tap into the app store. If it can't create this sort of unity, then the fractured development community that results will lag far behind Apple and its bazillion apps for the iPhone.

3.The tentative name of the new Verizon store is Widget Bazaar. Only a tone-deaf company would brand a new application store this way, with a dated Internet buzzword. Steve Jobs certainly wouldn't have signed off on it -- and if you're gonna go after Jobs, you'd better bring your A game. So far, Verizon's looking very junior-varsity by comparison.
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