Donovan Colbert believes that Google borrowed a game plan from Apple and Amazon to monetize the app market. Do you think they'll succeed?
I'm in an ongoing discussion with an app developer over the differences between the Amazon Appstore, Google Play, and Apple's App Store. This developer is disillusioned with Google Play. The platform is more difficult and expensive to develop for, and Android users simply don't monetize like other stores. In fact, two-thirds of Android users don't even pay for apps. This is troubling, but I think there are signs that Google is taking steps to fix things. They've borrowed a game plan that's successfully been executed twice before by other companies.
Amazon's initial efforts to monetize Android users came with the announcement of the Amazon MP3 store in 2007. At the time, it seemed like an odd strategy for Amazon to enter the digital music business. The store was platform-independent, but there was a strong emphasis on it being an alternative for Android users, and they heavily pushed the Android native app. Ultimately, this made Android users feel like they might finally have an Android-oriented music store that could compete with iTunes.
After several years of growing their presence as an Android destination, with users who were already accustomed to paying for media content, Amazon released their Appstore. In March of 2011, this was an unexpected move that was misinterpreted by the majority of analysts. It seemed as if Amazon was trying to compete head-to-head with Google as a destination for Android users. Opening an app store to steal consumers who were notoriously unwilling to pay just didn't seem to make sense.
I think the release of the Kindle Fire shows a brilliantly executed long-term strategy that mimics the evolution of Apple's iPod line into iOS. I'd argue that from the start, Amazon knew what they were doing with the MP3 and Amazon Appstore. They had a well-established base of consumers who were used to paying for digital content, and they intended to expand that base to include apps, music, movies, magazines, and other content.
Many bloggers began to argue that the Kindle Fire didn't actually count as an Android device. By extension, the Amazon MP3 store, the Amazon Appstore, and the other digital content destinations offered by Amazon were never an attempt to capitalize Android users. The intent was to create their own ecosystem of Kindle Fire users who would pay for content. As the first Android-based tablet to gain significant consumer attention, I'd say they hit their goal.
The evolution of iOS also follows this pattern. We forget that the iPhone isn't a phone with an iPod — it was originally an iPod with a phone. When the iPhone was released, it already had a consumer base that was used to paying micro-transactions for digital content. Apple expanded its offerings to include videos, then apps, books, magazines, and other content. Their users were always used to clicking "yes" to purchase content.
Google did it backwards. They became the alternative to iOS for people who didn't want tightly-regulated oversight of their digital media. Like a moth to a flame, the users who were the most interested in Android were the ones least likely to purchase any digital media, including pirates, rippers, burners, and hackers.
However, if you've been paying attention, you'll note that a while back, Google made a heavy push to improve and expand their content libraries. Google Books became legitimate (and for-profit) when Google eBooks was announced in 2010. Google Music Beta was introduced in May 2011. All of this was integrated and expanded to include movie and TV purchases when the Android Market was rebranded Google Play.
If this attempt to create a market of consumers more likely to click the purchase button wasn't clear enough, the release of the Nexus 7 tablet as a "Kindle-Fire killer" should make Google's intentions completely transparent. I recently saw Radio Shack offering a $25 Google Play credit with the purchase of a new Android phone, and the $25 credit for the Nexus 7 created a rush of Android app purchases. Google also announced Google Play gift cards.
Apple did it, as did Amazon, and now Google is doing the same thing. With estimates as high as 6 to 8 million Nexus 7 units moved this year, mainstream adoption among users who will make app purchases will certainly grow.
I don't expect Android users to ever monetize as much as iOS users, but I believe Google is making an effort to increase those numbers in a way that will be hard for developers to ignore. I also think ICS, Jelly Bean, and Motorola's direction for Webtop will fix many developer issues over device fragmentation, but that's a topic for another blog.
What do you think, has Google borrowed a page from Amazon and Apple? If so, will it work, or will Android remain a difficult-to-monetize app platform? Share your opinion in the discussion thread below.