Phonepe's Indus Appstore gains traction amid Google-developer spat

Indus Appstore thrives with rapid user adoption and developer interest

Amid an ongoing tussle between Google and Indian app developers, fintech major Phonepe's Indus Appstore seems to have benefited. Launched last month to rival Google Play Store and Apple’s App Store, the smartphone mobile app has seen impressive user adoption, crossing over 1 million downloads within a month.

As many as 45 per cent of these users are from Tier-II cities, the company said.

“A growing number of app and game developers have started listing their applications on the app store. Thousands of developers have listed their applications in the last couple of weeks,” Akash Dongre, Chief Product Officer and co-founder, Indus Appstore, told Business Standard.

ALSO READ: PhonePe to go global in a couple of months, says CEO Sameer Nigam

Last month, PhonePe announced the launch of Indus specifically for the Indian market to create “a more competitive and localised mobile app store economy for India.”

The rise in installations of Indus comes amid an ongoing spat between Indian developers and Google over the tech giant’s billing policy.

Kudos to @IndusAppstore for reaching 5 Lakh downloads in just 2 weeks!

????Download #IndusAppstore and experience personalized recommendations tailored just for you. https://t.co/hgduVNdpON

— PhonePe (@PhonePe) March 13, 2024

On March 1, Google announced it had removed apps from its Play Store for alleged non-compliance with its user choice billing (UCB) system. These apps included Shaadi, Bharat Matrimony, Balaji Telefilms’ Altt (formerly ALTBalaji), audio platform Kuku FM, dating service Quack Quack, and Info Edge group’s Naukri.com and 99 Acres.

App developers alleged that Google was using its dominant position to charge exorbitant commissions of 15-30 per cent for its services. The tussle paused on March 7 after the parties involved agreed to a four-month extension in the payment of pending fees related to services offered by the Play Store, temporarily restoring the status quo.

ALSO READ: Google, Indian app developers 'agree to' pause billing dispute for 4 months

The Supreme Court has agreed to hear the appeals that were filed by 10 developers on March 19.

Indus’ promise of zero listing fees for the first year and no in-app commissions for payments made through third-party gateways have put it in the spotlight.

"Discussions around the need for an alternative Appstore have intensified in the last few weeks, recommending Indus Appstore as the alternative,” Dongre said.

However, experts say that Indus is likely to face a rocky road ahead if it aims to become a viable alternative to market leader Google.

“Google has a monopoly in the Android ecosystem. Although several apps were delisted, it does not mean that the market will shift from Android to another operating system (OS). It will take some time to build a viable alternative,” said Prachir Singh, Senior Analyst, Counterpoint – a technology market research firm, who is of the view that it may take at least two or three years before Indus can emerge as a viable alternative to Google.

According to industry estimates, Google Play Store currently holds a share of over 95 per cent in the Indian market.

To incentivise users, Indus is offering a host of features such as making the app store available in 12 Indian languages and offering video-based discovery features to make the user experience more engaging. It also allows users to register using just their mobile numbers, without requiring an email ID.

However, to become a competitor to incumbents, analysts say that Indus would require a strong brand value. This can only be achieved through partnerships with original equipment manufacturers (OEMs) to ensure Indus comes pre-installed on smartphones in India, they say.

Indus has already announced partnerships with some OEMs and is in discussions with others, in a bid to make its app store a default choice on smartphones in India.

“Indus Appstore has currently tied up with Nokia and Lava, and is in advanced discussions with a few other major OEMs. We plan to be in 250-300 million smartphone devices by the end of the year,” said Dongre.

According to data from the International Data Corporation (IDC), neither Nokia nor Lava was among the top ten smartphone makers for the Indian market in 2023, both having a market share of less than three per cent.

To attract a meaningful user base, analysts say, the company will need to partner with larger OEMs, such as Samsung, Xiaomi, Vivo or Realme.

“Since we are operating in an Android ecosystem, the kind of reach and exposure that the Play Store can provide is very difficult to recreate,” said Faisal Kawoosa, founder and chief analyst at research firm Techarc.

He added that Indus might also benefit from forging partnerships with app developers, who could in turn advertise the Indus app via their campaigns.

“For instance, with chipsets like MediaTek and Qualcomm, they work closely with handset makers and have very close integrations, as against other component makers,” Kawoosa said.

It is unlikely that the platform can take on incumbents in the near term, but Indus may succeed in “making a dent,” analysts say, adding that how it manages to become an effective alternative to the Play Store remains to be seen.

Making a dent

Since its launch with 200,000 apps, Indus Appstore has seen over 1 million downloads within a month

45% of these users are from Tier-II cities

Indus Appstore claims it will be in 250-300 million smartphones by the end of the year

Experts say it is unlikely that the platform will be able to take on incumbents in the near term