The Wall Street Journal is reporting that Amazon is making a deeper foray into the smartphone world by creating its own independent app market for Android devices. Amazon already competes with iTunes with Amazon MP3, but is seemingly stepping up against Apple and Google with the latest announcement.
According to the report, Amazon would charge developers 30% of an apps’ profits, mirroring the same 30/70 split employed by both Apple and Google in their respective app stores. There is also a stipulation that apps sold on Amazon would not be allowed to be sold for a lower price anywhere else.
The one advantage Amazon has over Google is that it already maintains a “payment relationships with millions of customers, all of whom are familiar with its checkout system,” WSJ said.
The Amazon announcement comes as a number of players have hinted at plans of their own app stores. Verizon Wireless is bringing the VCAST music and app store to Android devices that run on the network, like the popular Droid line and the Samsung Fascinate. Best Buy has also expressed interest in launching an app store of its own. “We are exploring this concept at this very early stage, but we have no concrete plans at this time. Google, though, is an obvious partner,” Best Buy Chief Technology Officer Robert Stephens told WSJ.
It’s no surprise that so many players are trying to capitalize on the lucrative mobile application market. Research firm Parks Associates told The Motley Fool that by 2014, consumers will have downloaded 11 billion apps. Juniper Research has projected the value of the mobile app market to be around $25 billion by that year.
With the popularity of Android continuing to climb, and the impending launch of a number of more economically priced devices running the OS this holiday season (not to mention the announcement that Verizon will definitely be getting the iPhone), it’s easy to see why Amazon is jumping into the game. According to WSJ, Android’s share of the U.S. smartphone market climbed to 19.6% in August, compared to 2.5% a year earlier. The iPhone was still holding on to 24.2% of the smartphone market in in the same timeframe. (Figures provided by comScore.)
One down side — developers have noted — of Google’s Android Market is its cumbersome organization. Many quality apps get buried underneath 50 different fart machines and free horoscope apps. What Amazon can bring to the table is a better organizational structure, making quality and niche apps easier to locate. Amazon could also capitalize on its ability to recommend content to consumers, the same way it currently does with its online store.
No name for Amazon’s app store has been announced, nor has a possible launch date. “We don’t comment on rumors and speculation” an Amazon representative told WSJ. However, prospective developers began receiving a “welcome packet” from Amazon. A few items of note: DRM is up to the developer to require or not; Amazon would review apps that are submitted, rather than letting any app into the market the way Google does; and the app store will allow videos from developers, allowing consumers to view demos of the apps before installing.
Another possible risk of the Amazon development — it could further segment the already subdivided Android universe.
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