Shaking up the app store market - Mobile World Live

Shaking up the app store market

23 MAR 2011

While Apple is on the receiving end of much (often deserved) criticism, the company undoubtedly created the mobile app industry as it is now. Certainly Apple wasn’t the first to market – a range of products were previously available for smartphone platforms, and Brew and Java apps have served feature phone users for years. But Apple did manage to make the whole process consumer-friendly, from finding apps to purchasing and installing, taking mobile apps into the mainstream.

This is something which, to date, has been lacking from the Android ecosystem. A quick browse through Mobile Apps Briefing will highlight a number of issues with Android Market, Google’s own store. Android Market lacks a fully integrated, globally available payment channel. Android Market apps have been found to contain malware. Android Market contains apps which are guilty of copyright or trademark infringement, in an attempt to lure unwary customers seeking familiar brandsAndroid Market apps breach user privacy. The list goes on (and on).

Despite the fact that Android devices are selling well, having gained traction with a number of top-tier device manufacturers and operators worldwide, it is worth reiterating figures published by IHS Screen Digest last month. In 2010, Android Market had just 4.7 percent revenue share of the app store market, behind Nokia’s Ovi Store (4.9 percent), BlackBerry App World (7.7 percent) and Apple’s App Store (82.7 percent). Despite its success in the market in terms of catalogue and reach, Android Market has yet to establish itself as a channel for paid-for apps.

This has, unsurprisingly, led the industry to seek alternatives.

Perhaps the most high-profile example was when Rovio decided to launch Angry Birds for Android initially though GetJar – and GetJar has subsequently stated that it plans to increase its focus on becoming an alternative Android distribution channel. But GetJar only offers apps that are free to the user at the point of download, meaning that developers preferring a straightforward paid-download model (including, for example, many games companies) need to look elsewhere. Games developer Gameloft has begun offering some Android products direct-to-consumers, albeit not without issue.

Operators have also seen the opportunity, with Vodafone stating that developers prefer its app store to Android Market, and with Verizon Wireless also extending its V Cast Apps store to support Android. And this is before considering the numerous vendors who have also thrown their hat into the ring.

What this complex picture shows is that there may be a real window of opportunity for Amazon to position itself as the single, consumer destination of choice. While there is certainly likely to be a continued role for niche stores, the option of a mainstream, one-stop-shop supported by an established brand is likely to be extremely popular with consumers. Certainly the knowledge that a store is moderating content in a way which Google clearly has not with Android Market will help reassure mass-market customers, who may otherwise be deterred following the recent scare stories. Again, Apple’s App Store policies may not be perfect, but at least they do promote a fair degree of user confidence.

And many of the features which Amazon can offer will benefit developers as well as consumers. An integrated – and proven – payment mechanism will mean that customers are more likely to make purchases. Amazon’s merchandising options should enable developers to achieve greater visibility, as well as creating the potential for cross-selling once a customer has expressed an interest in a specific product – even if this is not a mobile app. Like this CD? How about this band app? Ultimately, greater volumes represents greater revenue potential, whether through paid sales, in-app purchasing or through mobile advertising.

But Amazon will also have hurdles to overcome. Android Market is still the default app store on many Android devices, with operator stores providing the main alternative (and vendor stores also featuring prominently). As an outsider, building visibility and penetration of its store will be crucial, when some of the cards are stacked against it. And Android Market still has momentum on its side: Google is also well aware of its limitations, and has been working to address its proposition.


Steve Costello

The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members


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