Are Amazon?s spunky mobile plans meant to unseat Apple?
Amazon?s debut of the Appstore for Android and Cloud Drive were the first major plays in the online retail giant?s game plan to become the biggest merchant of mobile content in the world.
Unveiled this week, Amazon Cloud Drive provides storage for documents, pictures, videos and music, with applications that let users access that content across desktop computers, Android-based smartphones and tablets. Google and Apple both have similar platforms in development, and Amazon is increasingly butting heads with the two titans?a competitive partnership with Google for the Amazon Appstore for Android and a lawsuit filed by Apple over Amazon?s use of the term ?Appstore.?
?The Amazon app store is a good addition to the Android ecosystem?one of the downsides of Android has been the discoverability of apps and the kludgy payment system,? said Michael Boland, senior analyst and program director at BIA/Kelsey, San Francisco. ?There?s part of me that thinks Google has sort of subconsciously flubbed the app marketplace because it?s otherwise pushing for a mobile world where the browser is the front door?versus apps.
?That makes sense given browser-based activity relies heavily on search, where Google makes most of its money,? he said. ?That aside, the Amazon marketplace will improve many of the discovery and payment deficiencies we?ve seen in Google?s own Android Market, and bring it closer to what Apple has done with the App Store.?
Amazon's personalized app recommentations
Discoverability will come from Amazon?s famous behavioral targeting algorithms and suggested items, while payments are streamlined by its many existing credit card relationships and one-click buying option.
Amazon is further driving activity with a free application per day for popular apps such as Angry Birds.
Mr. Boland said that initially setting up a store account is way more difficult than it should be, but that he expects that experience to improve.
?On a related note, in-app payments have also finally come to Android, which should considerably boost the platform?s appeal to users and ability for developers to make money,? Mr. Boland said. ?The latter is a key element in any mobile development ecosystem as it brings more and better apps to the table.?
Competition in mobile content distribution space
Strategy Analytics is forecasting that Amazon will reach at least 30 percent of all Android application downloads in the United States by the end of the year, skewing higher on paid and lower on free.
The opening of the Amazon Android app store on its surface may not appear to usher in a sea change in mobile apps distribution.
While competitive third parties such as GetJar, Handango and Appitalism already exist, as well as newer players such as Apptown, Amazon is a different entity entirely, according to the research firm.
There are a few tactical and fundamental reasons why Amazon matters, including its extensive billing relationships, enhanced discoverability, broad consumer insight, credibility and unrivaled resources.
?Amazon is really looking to redefine what we have come to expect from an app store and they will become a major player,? said Josh Martin, senior analyst at Strategy Analytics, Newton, MA. ?The truth is that if Amazon is successful, then Google comes out ahead, because more people are using more apps for longer periods of time.
?Google isn't expecting to drive real profit from its app store anyway, so if Amazon can grow the user base Google will be happy?this is in no way an Amazon versus Google scenario,? he said. ?And Amazon continues to sell Apple products, so it?s not really an Amazon versus Apple scenario either.
?Simply, Amazon sells stuff and more of that stuff is becoming digital?Amazon's success would actually help Apple, because it could reduce the regulators breathing down the company's neck.?
Expanding its empire
Launching an app store is a logical product extension for Amazon, which has been gaining an increasing share of its revenue from digital goods, per Forrester Research.
Amazon?s digital product catalog includes ebooks, music MP3s, videos and games. Mobile content is the next frontier, and Amazon Cloud Drive is the online retail giant?s attempt to dominate sales of content that is accessible on any device.
And while the Amazon Appstore for Android is specific to a single operating system, it is not a stretch to speculate that there could be versions for other OSs in the pipeline.
Shazam Encore for Android tablets is available for free via the Amazon Appstore for Android
Forrester is forecasting that revenue from mobile applications worldwide will grow from $1.9 billion for smartphones and $300 million for tablets last year to $4.5 billion for smartphones and $1.1 billion for tablets this year.
In 2015, Forrester expects the revenue generated by apps to reach $29.4 billion for smartphones and $8.1 billion for tablets.
?It makes sense for Amazon to branch off into the app market,? said Sarah Rotman Epps, senior analyst at Forrester Research, Cambridge, MA. ?There is a growing market for digital goods, so it makes sense that Amazon would want a piece of it.
?It is more of a partnership than a competition between Amazon and Google, because Amazon is selling Android apps, and Google makes money off of that,? she said. ?Consumers will buy more Android apps, and that is a good thing for Google, even if Amazon is selling them.
?I don?t know that Amazon will necessarily launch their own tablet hardware, but it is already a player?anyone with an Android tablet can now buy apps for it through Amazon, so it could be a potential future partner for other tablets as well.?
There is an issue around trust in payments.
Apple?s iTunes has more than 200 million credit cards on file, which creates a frictionless environment for people to buy on Apple?s App Store.
Forrester estimates that Amazon probably has more than 100 million credit cards on file, making one-click buying for apps in the Amazon Appstore for Android a much more convenient scenario than Google currently offers in Android Market.
?Consumers are not necessarily used to giving Google their credit card, as they are with Amazon,? Ms. Rotman Epps said. ?Amazon is also very good at merchandising and giving personalized recommendations, so it should be able to apply that to apps.?
While Apple, Google and the various third parties will not throw up their hands and shut down their respective app stores just because Amazon has gotten in the game, the repercussions of the launch will be felt throughout the ecosystem.
The Amazon Appstore for Android and the Amazon Cloud Drive are clear indications of the retailer?s bold new strategy for monetizing mobile content.
Amazon has the brand recognition and the trusted payment mechanism it needs to be successful.
?While you wouldn?t think of Amazon as a retailer for apps, its recommendation engine combined with patented one-click purchase could provide for a great new way to get apps,? said Michael Burke, cofounder and president of appssavvy, New York. ?Plus, the Android developers and Android apps are in desperate need for an app store to compete with Apple and iOS.?
The Amazon Appstore for Android got exclusive distribution rights to Angry Birds Rio for Android tablets and smartphones
Amazon already has partnerships in place with a range of publishers and media companies, including CBS, as well as application/game developers such as Rovio, the creator of Angry Birds.
The retailer is surely working to expand those types of relationships to drive revenue via a host of channels.
?As a media company, we have a long-standing relationship with the team at Amazon,? said Rob Gelick, senior vice president and general manager of CBS Mobile, Los Angeles. ?When we were approached to be involved in their Android app store, we saw a great opportunity to expand the distribution footprint for our key applications via a trusted, secure gateway that has tremendous reach.
?Android is growing at a rapid pace, and we feel that the ecosystem has room for multiple storefronts,? he said. ?Google remains the principal point of Android apps consumption due to their scale, and we don?t view Amazon as a threat to Google or vice-versa.
?Our primary responsibility is to offer customers access to compelling CBS content via applications ? the partnership with Amazon helps us achieve that goal.?
Mobile Marketer?s Dan Butcher interviewed Aaron Rubenson, category leader of the Appstore for Android at Amazon, Seattle. Here is what he had to say:
Why did Amazon decide to launch the Appstore for Android?
At Amazon, we start with the customer and work backwards. We are always looking to improve the customer experience.
The sheer number of apps available today makes it hard for customers to find high-quality, relevant products at great prices.
We?ve spent years developing innovative features that help customers find and discover relevant products from our vast selection, and we?re excited to apply those capabilities to the apps market segment.
We?ve also developed an exciting new feature, called Test Drive, that lets customers try an app instantly on their computer before buying it. It?s not just a video of the app?you use the actual app running on a simulator through your computer.
You control the app using the mouse, just like you would use your finger to control the app on your phone.
An Appstore is a logical next step for Amazon. We take mobile shopping very seriously and across the company, we are working hard to make great products and services available on mobile devices.
We continue to innovate the mobile shopping experience with the Amazon Shopping app, available for Android, Blackberry, iPhone, iPad and Windows Phone 7, Price Check by Amazon, the Amazon Deals app and Windowshop for iPad.
We have numerous Kindle apps. Our subsidiaries like IMDB and Audible also have robust mobile applications.
How will the Amazon Appstore for Android differentiate itself from Google?s Android Market?
The Amazon Appstore for Android will feature great prices and good deals. In fact, we?ll be giving away a paid app for free every day.
We?re also focused on providing customers with great shopping features and product information so they know what they?re about to buy ? and will therefore be satisfied with their purchase.
For example, we?re working with developers to have detailed product descriptions for each app ? including a rich array of screen shots and video that show apps in action.
We?re also excited to offer customers a ?Test Drive? feature that lets customers try apps directly from their Web browsers before buying them.
Additionally, to ensure our customers have a good experience with the apps they buy from Amazon, we are testing all apps prior to making them available in our store.
Customers will discover apps that are relevant to them based on personalized recommendations and they will shop with confidence using Amazon?s trusted payment options.
How do partnerships with publishers, media companies and app/game developers such as Rovio fit into Amazon?s Appstore strategy?
We are excited to collaborate with publishers, media companies and app/game developers to offer great apps in the Amazon Appstore.
As I?m sure you can understand, I?m not able to share details of our relationships with any developers.
The Amazon Appstore is a great opportunity for developers to have their apps discovered by tens of millions of Amazon.com customers.
Our focus is on connecting customers with the right apps and developers are seeing the value proposition Amazon can bring to their products.
How is Amazon promoting the Appstore for Android?
Unfortunately we can?t discuss our marketing strategies. However, the Amazon Appstore is a great opportunity for developers to have their apps discovered by tens of millions of Amazon.com customers.
We are tweeting about great offers like Free App of the Day and upcoming exclusives ? and also posting on the Amazon Appstore Facebook page.
Could there eventually be Amazon Appstores for other mobile operating systems?
The Amazon Appstore will feature Android apps. We are always evaluating opportunities to provide as vast a selection as possible to customers, and the Amazon Appstore will be no different.
Angry Birds Rio for Android