By Ingred Lunden
Yesterday word began to emerge that Apple (NASDAQ:AAPL) had created a new section in the app store: Catalogs, where it has slowly started to funnel apps that would have previously been in other categories like Lifestyle. The news was first brought to light by the developers of Catalog Spree, a catalog aggregating app that saw itself get moved in the process.
There are a number of benefits to the new category that are pretty basic, discovery possibly being the most obvious of all. But it also signals a way for Apple to provide a whole lot more in mobile commerce services — something that people have long been anticipating but have seen little in the way of activity from the company.
Joaquin Ruiz, the founder of Catalog Spree, says he is not privy to any details of what Apple will announce today, but he does know where Apple would be best placed to do something more than just group his app with other apps like it: providing a centralized billing service for all the apps.
Offering payment services for physical goods sold through apps could work along the lines of Apple’s current in-app payment offering, which is currently used for digital goods like games credits, subscriptions and extra content. It would signal a much easier way of paying for things on a device — and Ruiz thinks would point to a lot more purchasing as a result.
“Our application is effectively a mall with every store like an individual shop with its own checkout,” he explained. And that, effectively, is multiplied many times over when you consider dozens of other catalog apps.
However, he points out, Apple has several hundred million credit card numbers — more than most banks do. “If they were to implement a centralized checkout system, that would be massive. You could visit that ‘mall’ and have a single ID to pay for everything.”
Carolina Milanesi, an analyst at Gartner, agrees: “Whether offering payments for goods through catalogs becomes an extra revenue stream for Apple remains to be seen, but what is more obvious is that it would deliver a lot of value to those owners of catalog apps.”
But as Ruiz also notes, this is an area that is probably being explored by others, too — companies like eBay (NASDAQ:EBAY) and Amazon (NASDAQ:AMZN), which already provide centralized billing for many smaller storefronts, would be likely candidates for such services.
And this model would be a significant shift for Apple. For one thing, it couldn’t run something like this as it does in-app payments, where it takes a 30 percent cut of all transactions and in February said it had paid out more than $4 billion to developers to date. The margins on physical goods can be as low as ten percent, says Ruiz, so that kind of commission on transactions would never work. More likely would be the kind that credit card companies already take: between one and two percent.
What about NFC? With the Apple announcements coming up soon, it’s anyone’s guess what will actually be revealed, although guesses have been strongly favoring the announcement of a new iPad model, rather than something related to a new iPhone. (Among all the rumors we’ve seen today, but if a texture-friendly interface really did make its way to the device, that, too, would be a big boost for catalog apps as well, even if it didn’t emerge today.)
That would point to NFC continuing to remain on the backburner in terms of new technologies — although Milanesi at Gartner (as do many others) believe this is an obvious future step. “I’m sure is NFC is on their radar,” she said, but added that they are still trying to figure out the way of exploiting that, and that the more obvious first device for that would be a handset, not a tablet.
When I was at the MWC conference last week in Barcelona, mobile payments was a topic that came up again and again, and it was remarkable how many times Apple would be mentioned in the same breath as something like NFC, an area where it has never announced anything.
The thinking seems to go like this: once Apple moves on NFC, that would signal a sea change in how others would be able to use it — not unlike Apple’s move into smartphones in general.
“One of the key differences is that Apple takes the time to educate consumers, and so when they have the technology in place, the consumer can take advantage of it,” said Milanesi.
Part of that is because of Apple’s ability, for better or for worse, to essentially swipe away everything else and simplify how things work. “There are so many conflicts of interest in payments, with PayPal, Google, carriers, banks, all of them wanting a cut,” said Milanesi. “So the hope from some is that with Apple’s power, it will just come in and make it happen.”
As we said above, even without anything commercial getting announced today, discovery is a good enough reason on its own to create a separate category tab for Catalogs.
With more than half a million apps in the App Store, we hear almost daily about discovery problems, and catalogs were getting lost in Lifestyle. One example: Pimp Your Screen, currently the top paid app, has very little to do with shopping for a new blouse. Sorting that out may have been reason enough to reorganize, but if Apple’s other goal is to keep developers happy about making money, more commercial efforts can’t be too far off, either.