Chapter One: Introduction1.1 Topic RationaleAfter the first smartphone application store was created by Apple in July 2008, the Apple App Store has developed only 500 to more than 425,000 applications and contributed 15 billion downloads (Dredge, 2011a ). Furthermore, the huge sales of iPhones and applications have helped each other increase the snowball effect. Apple's innovation not only brings significant profits to the company, but also establishes a new sales model for smartphone software. The application store provides a convenient and efficient software sales platform for third-party software developers that allows them to participate with unprecedented enthusiasm (Singh, 2011). This new change fits the growing demand for personalization of mobile users which helps the smartphone software industry to enter into rapid and healthy development (Singh, 2011). Due to the great success of Apple's App Store, more and more companies such as mobile phone manufacturers, Internet companies and mobile operators have followed Apple's step by entering this market which makes the application store become a business hotspot . In other words, Apple's success makes App Store become the symbol of the new business model. Many followers such as Google Android Market, Nokia Ovi Store, Microsoft Marketplace and even many individual developers participate in this business activity (Protalinski, 2011). Indeed, how this new type of business model affects the traditional telecommunications sales mode and how Apple integrates the upstream and downstream value chain deserve further study. According to Chesbrough & Rosenbloom (2002), a successful business model can not only create value, but can also sustain the value achieved by rivals, while at the same time maintaining costs and prices... middle of paper... mobile phones they are used only for voice and text services. However, with the development of communication technology, the mobile phone not only provides voice and text messaging functions, but also provides high-speed mobile Internet (Miller, 2010). Third generation (3G) technology brings people from the era of computer networks to the era of mobile phone networks, which allows people to enjoy Internet service via smartphone without sitting in front of the computer. According to GSMArena (2010), the number of 3G subscribers reaches 500 million worldwide. Additionally, 3G technology accelerates the development of smartphones, making it possible to receive and send emails, watch videos online, listen to music on the cloud, and even manage your bank account without a computer (Miller, 2010). Therefore, all the needs provide a huge opportunity for third-party application developers.