Is the app store business over-retailed?

The buzz term at JavaOne 2009 seemed to be "app store." Sun Microsystems, host of the annual developers' conference, announced it's opening Java Store, handset maker Sony Ericsson touted its PlayNow Arena store and European wireless carrier Orange promoted its app store. The JavaOne week ends with smartphone maker Palm Inc. introducing its much anticipated Pre June 6 along with a budding Palm App Catalog.

The proliferation of online stores where consumers can buy applications for their mobile devices, and the proliferation of products on those shelves - Apple's App Store alone offers 50,000 applications - beg the question of when the saturation point will be reached.

Wireless carriers and third party vendors have long sold applications, but more recently, handset makers and platform providers have expanded the market, including Google's Android App Market, Microsoft's Windows Mobile Marketplace and RIM's Blackberry App World.

Will app retailing reach the point reached by Chrysler LLC, which recently announced plans to close about a third of its car dealerships? After all, over-retailing is the situation where there are so many of the same stores in a given location that sales of each outlet suffer.

Theoretically that may be true with app stores, but not yet, said industry experts during a panel discussion at JavaOne.

"The more the merrier because it increases demand," said Steve Glagow, vice president of Orange Partner, the partner development arm of the carrier.

Orange, Sun, Sony Ericsson and other companies were using JavaOne to encourage and enable Java developers to write applications for mobile devices, as well as for desktop and TV platforms.

Offering more applications for Orange subscribers makes them more loyal to the carrier, Glagow said, adding, "it also builds an affinity to the handset so they keep them for a longer period of time."

Customers keeping phones longer doesn't sound like good news for Sony Ericsson, but Bill Maggs, head of developer and partner engagement in North America for the handset maker, isn't worried. If a given application works well on a Sony Ericsson phone, they'll get repeat business from that customer.

Like any growth market, there will be vendors that succeed and those that fall by the wayside, but the application market still has a lot of room left to grow, said Jeet Kaul, senior vice president of Java engineering at Sun Microsystems. And like any product, there will be apps that are wildly popular and others that may have a shelf life of only a year.

"We don't know what kinds of apps people will want because demand keeps changing," Kaul said. "We're not at that [saturation] point yet."

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