Amazon woos developers for smartphone push but skepticism remains
June 17, 2014
With rumors rampant that Amazon will launch a smartphone on Wednesday, the ecommerce giant is touting that its AppStore offerings have tripled per annum, but Amazon faces an uphill battle attracting developers and displacing competitive devices.
Apple and Google have a substantial head start on apps and services, and in their dominance, crush any other companies who attempt to entrench themselves here. The fact of the matter is that the big five "smart" ecosystems Apple, Google, Amazon, Samsung and Facebook are all encroaching on each others territories, as well as stepping on the toes of existing or potential partners. Mobile is certainly ushering in a new wave of "coopetition" and an Amazon smartphone will shake up the landscape once again. As Amazon seeks to confront consumers at every touch point, it further fuels the rivalry between it and every other retailer.
To displace other competitive devices, Amazon does face an uphill challenge, said Eugene Signorini, vice president, mobile insights at Mobiquity.
Apps will definitely be critical, so therefore attracting developers by doing things like providing an easy means for porting existing Android apps is an important element. However, Amazon is banking on the fact that it can leverage its powerful ecosystem that includes customers, retailers, and content to make a successful entry into smartphones.
Some competing retailers may decide to participate in this ecosystem by developing apps for an Amazon device. Some will refrain, but Amazon hasn't been afraid to go head-to-head with larger competitors when need be, he said.
Dialing in on trends
According to an Amazon-commissioned survey by IDC released Monday, developers building apps and games for Kindle Fire are seeing an equal ROI as on any other mobile platform.
The timely update aimed at boosting developer interest also reported that the Amazon Appstore selection has nearly tripled in the past year and developers continue to report strong monetization from the apps they offer in the store. The Amazon Appstore now has over 240,000 apps and games, is available in nearly 200 countries and on a multitude of devices.
"As the largest digital retailer in the world, they have access to an incredible volume of consumers, and with 240K apps in their app store already, there's a pretty good base for them to work from. While that's only a fifth of the size of Apple and Google's app stores, sheer volume of apps isn't the most important indicator of success," said Craig Palli, CSO at Fiksu.
"Acquiring users who take meaningful actions - and spend - within apps will be the ultimate test of Amazon's smartphone strategy. Some early indications are pointing to monetization levels that are on par with iOS, which could be a great sign for Amazon," he said.
Additionally, Amazon Coins have become widely popularcustomers have spent hundreds of millions of Amazon Coins on apps, games and in-app items.
Some marketers are clearly jumping on the bandwagon.
MapQuest launched a weeklong promotion yesterday offering 199 free Amazon Coins to users who download the free MapQuest navigation app within the Amazon Appstore from a Kindle Fire or other Android device, along with the purchase of an MLB team kit.
To unlock the 199 Coins reward, Kindle Fire or Android device users must download the MapQuest navigation app, select and purchase an MLB team kit to customize their app, then select where they want their Amazon Coins to be rewarded.
MapQuest for Amazon
Part of its official partnership with MLB.com, MapQuests custom-branded MLB team kits are available for in-app purchase for $1.99.
According to the Wall Street Journal, Apple and Google are at war with developers of high-profile apps to feature them on iOS and Android respectively, without making them available on the other platform, or requesting a gap between platform releases.
The perks offered in return for exclusivity include priority placement on the Apple App Store, and developers are more than willing to take the bribe. Though the anticipated cool factor of the Amazon phone may seem appealing, it may not be enough to attract developers whose end game is ultimately to increase revenue, and immediately, Amazon is not where the money is.
Shark infested waters
Swimming into unfamiliar waters, the ecommerce pioneer is expected to brave the tides with patented 3D tech integration in its first smartphone powered by four front-facing cameras and media streaming hardware supported by the revamped Prime.
But fancy features will not be enough to remain firm with rivals. In line with Amazons famed web strategy, the phone is also predicted to have a low price tag, which is critical when competing with popular and expensive hardware such as Apples iPhone and the Samsung Galaxy S, and affordable though still persistent Motorola and Google models.
Even if Amazon is able to take a large bite out of the market, there is discrepancy between profit and market share which makes the turbulence of favorability an unreliable measure for margin.
Android dominates smartphone market share, but it does not sell more apps, or generate more advertising revenue than Apple.
Comparing real world usage data, Apple has an overpowering share of smartphone and tablet app sales, Web browser use, and ad network hits. Apple leads Android in enterprise adoption and in retail shopping use by consumers.
According to Forbes, the volume of apps available in the Google Play app store has caught up to Apple, and Android is winning in app downloads as well. Google reportedly comprises 75 percent of all app downloads compared to only 18 percent for Apple. Yet, Apple made half of all app revenue in the most recent quarter, demonstrating once again that volume and market share dont translate directly to income.
Tried and True
Other non-telecom merchants such as ESPN and Disney have in the past released branded phones and services, but could not acquire enough customers to keep the devices or networks afloat.
The late ESPN phone
The unique dynamics of the smartphone market will undoubtedly test Amazons selling strategy.
With three products already making their way mainstream (an e-reader, tablet and streaming internet TV service) Amazon seems to be equipped at least to enter a space of intimacy with consumers, that being a leap into the gadget which has been deemed the most personal and critical of consumer devices.
Amazon is no stranger to creating trust, and by combining a branded phone with its own set of Prime services, Amazon may become a major player in more than the digital storefront. Amazon will likely be targeting its existing base of Prime customers who utilize digital media particularly TV shows and movies as early adopters of its device.
The timing of Amazon's announcement last week of music streaming for Prime customers was no coincidence.
Amazon will likely approach the smartphone market in the same way it did when it launched its own KindleFire tablet - which is to use the device as a complementary product for existing services, Mr. Signorini said.
Like the KindleFire, for an Amazon smartphone to be successful it will need to do two things for consumers: act as a mobile storefront for the wide variety of products available on Amazon.com and provide a great platform for consumption of digital media offerings such as music and video.
Michelle is editorial assistant on Mobile Marketer, New York
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