The distribution of mobile content is in the midst of dramatic evolutionary step. Until recently, offerings ranging from ringtones to enterprise/productivity applications generally were distributed via one of two channels: the carrier deck, which is accessible from feature phones and typically focuses on games and other consumer-targeted products; and online, third-party distributors such as Jamba (a longtime provider of content subscriptions) and smartphone-focused storefronts such as Handango and Handmark.

But the industry began to undergo a seismic shift last year with the launch of Apple’s App Store. The channel, which is integrated with the company’s popular iTunes store, found an immediate audience with both iPhone and iPod touch users and developers of mobile applications. Apple earlier this year announced its 1 billionth download – within nine months of the App Store’s launch – and currently boasts a library of nearly 40,000 offerings.

A host of competitors from across the mobile spectrum are in various stages of following Apple’s lead. Google was first with Android Market, which is built on an open-source platform backed by a consortium of dozens of key players in wireless.  Research In Motion jumped on the bandwagon in recent weeks with its BlackBerry App World, and Microsoft, Nokia and Palm – among others — are set to launch offerings this year.

The motivation to build an application-distribution channel varies from segment to segment, of course. Apple has long relied on iTunes to help it sell hardware at high margins, and the company is duplicating that strategy in mobile but also pocketing revenue on paid downloads. But Nokia – another phone manufacturer – is hoping to morph into a mobile Internet-services company, using free offerings such as wireless e-mail to create stickiness with users. Carriers such as T-Mobile USA and Verizon Wireless are experimenting with new kinds of application stores in an effort to grow their subscriber bases and, in some instances, to sell devices. Google, interestingly, is taking a longer view and forgoing a piece of each transaction in the hopes of boosting mobile Internet traffic and cashing in on increased advertising revenues.

This report identifies the major players in the application-distribution model and looks at how the trend will affect carriers, handset manufacturers, developers, content owners and end users. It also examines key factors that will contribute to the success or failure of specific app stores including:

• Reach (The addressable base of users/handsets)
• Business models and marketing strategies
• Partnerships/alliances
• Developer ecosystems
• Potential pain points, including push-back from operators

The report also identifies potential newcomers to the mobile space – a segment that is sure to grow. Wrapping up, we examine general shortcomings in the new app-store model, what solutions are already needed and how the space will evolve over the next several years.