

Amazon owning app distribution is irrelevant - avichal
http://avichal.com/2011/11/23/amazon-owning-app-distribution-is-irrelevant/

======
tptacek
I'm not sure the author really understands the point that's being made about
Amazon's "ownership" of Android app distribution. The concern is
straightforward:

1\. Amazon is --- probably, and for the next 18 months or so --- going to have
the most popular Android tablet on the market.

2\. Amazon does not provide mainstream users with access to Google's Android
Market.

3\. Android developers are going to be compelled to deliver software to Amazon
users, because Amazon is going to supply a plurality of the entire addressable
market for Android apps.

4\. To supply Amazon users with Android apps, developers have to use the
Amazon market.

5\. Not only will developers need to use the Amazon market to address Amazon
customers, but off-brand Android users can (and may) also end up relying on
Amazon's market.

Google's Android Market is _structurally disadvantaged_. And, simply having to
sell through Amazon is already a hardship for developers; Amazon has policies
that developers are going to have to comply with, even though those policies
aren't inherent to the Android ecosystem.

Saying that Google doesn't have to care about native apps, that the web is
where it's at, that they're "skating to where the puck is going to be" ---
that's all besides the point. The concern is specifically about the Android
app ecosystem. If you don't think it matters that Amazon is redefining that
ecosystem, well, OK, but that doesn't make it not a concern.

~~~
ryanhuff
The resulting fragmentation along device type is the biggest problem for
developers. Google is trying hard to unify the phone and tablet, but Amazon is
throwing a wrench into that strategy. Amazon can dictate the terms of Android
tablet app distribution, further complicating matters for Android developers.

~~~
fpgeek
Considering that Ice Cream Sandwich addresses most of the negatives from early
Kindle Fire reviews (e.g UI lags, disappointing browser, screenshots, etc.), I
don't think Amazon's "wrench" is going to last that long. At least one tech
journalist has claimed that they have a source that says Amazon is already
working on the Fire's ICS upgrade.

~~~
ryanhuff
Amazon isn't selling the Fire as a tablet, so they are already trying to
differentiate themselves from the rest of the android tablet players. With
their unique position of having their own app store and being a platform
player, it's clear to me that their plans are beyond simply being another
android device manufacturer. If they gain a dominant position in the android
tablet space, it will be natural for them to try to gain power over the
platform. It will be interesting to see if Google can improve their tablet
fortunes and get consumers go for the normal ICS tablets.

------
ajg1977
This post is rather naive and shortsighted.

 _Google is a search company. Owning the platform is Google’s way of making
sure they own search. Google does not care about facilitating app sales
because they can make 15-30x the money from search._

Google benefits from owning the platform because the Google suite of software
(AppStore, Browser, Mail, Maps), bundled on almost every Android device,
drives search traffic to Google and encourages users to stay within the Google
ecosystem.

Most Android OEM's are effectively forced to carry this software (and meet
'compatibility requirements' such as Google being the default search engine)
because without it their devices are far less compelling. Replacing an email
client is a solvable problem, a maps alternative is something that could be
licensed, but creating an entire AppStore replacements is unrealistic for most
companies.

Unless you are Amazon.

If the Amazon AppStore becomes a major player in the Android app market, and
OEM's choose to license it, thus forgoing the Google software suite (most of
which is much easier to replace), Google will be in serious risk of losing
their leverage over OEM's. They will not be able to ensure Android devices
drive users to their services, and could even end up paying OEM's (a'la
Mozilla) to have Google as the default search option on these devices.

~~~
avichal
Apps are easy to replace, the web is not. Google thrives in a massively
fragmented world because that's where search matters. Google dies in a single
platform world owned by Apple.

Fragmentation makes developers' lives more difficult, makes users' lives more
makes difficult, but drives people to the web as a unifying platform. Google's
cost of customer acquisition may go up in the short term, but Google still
makes all of the money from search at the end of the day.

~~~
Xuzz
I would agree, except that Google itself has said that over 60% of their
mobile traffic comes from iOS. [1]

[1]: [http://9to5mac.com/2011/09/21/google-23rds-of-our-mobile-
sea...](http://9to5mac.com/2011/09/21/google-23rds-of-our-mobile-search-comes-
from-apples-ios/)

~~~
avichal
Great link. Not surprising actually, considering the demographics of iOS users
and that iOS includes iPod Touch and iPad.

Google usually talks Android numbers vs. iPhone. Apple usually talks about
total iOS devices and often emphasizes the install base since they were out
first and built a 100 million device install base before Android even
launched. In this case, it's in Google's interest to talk about total iOS
install base so that's what they did, even though they don't really compete
with the iPod Touch directly.

~~~
bishnu
Sure they do - it took them a while but there's comparable devices now:
[http://www.engadget.com/2011/03/16/samsung-galaxy-
player-4-a...](http://www.engadget.com/2011/03/16/samsung-galaxy-
player-4-and-5-hit-the-us-this-spring/)

------
ChrisLTD
Good post. None of the parties mentioned, Apple, Google or Amazon really care
about owning app distribution. It's something they do to increase the
desirability of their devices.

Apple does it so they can sell more iDevices, Google does it so more people
want to buy Android devices and see their ads, Amazon does it because they
want people to have Kindles to buy their other digital goods.

\----

Not that this is likely, but I don't think Google would be happy if Amazon
took over app distribution. They wouldn't want another company in the middle
that could dictate terms to Google. Remember how for a while it looked like
Apple was going to banish Google ads from iOS apps.

------
BenoitEssiambre
If Amazon didn't care about owning app distribution, they would include the
Android Market on their devices to make them more desirable to customers. They
wouldn't have put the efforts in convincing me to put my apps in their store
while imposing draconian terms (even worst than Apple!) where they control the
prices developers' apps are sold. They wouldn't give away apps to get people
to use their store.

Amazon goes as far as using writers to rewrite the descriptions of all apps
before they are put up in their store. That is not the behavior of a company
that doesn't care about app distribution.

~~~
avichal
Amazon needs an icon on the Kindle Fire that says "store." They want to use
this as a gateway to get you to go to Amazon.com and buy all sorts of other
things besides apps. Google is making a push in music and video (through
YouTube), which is starting to tred on Amazon's territory and core businesses.
Amazon can't cede the entry point to the store to someone else. They want to
own that entry point, and that will be an icon on your tablet's home screen
that says "store."

------
kinofcain
"Amazon does not care about app sales"

Amazon would have to be blind to their own success selling one type of virtual
good to kindle owners for them to not care about selling another type of
virtual good to kindle owners.

As others have pointed out, the fact that they went through the trouble of
building their own App Store proves they care _deeply_ about app sales.

What's more, the low margins on the kindle fire prove they not only care about
app sales (and book sales, and movie sales, and music sales), they're
_relying_ on them.

~~~
avichal
Amazon will do very well on digital goods sales. But apps are actually a small
chunk of dollars in the grand scheme of things -- especially on tablets.

Amazon is going to recoup their costs through additional commerce on
Amazon.com. That's what people use tablets for and it's a massive market that
Amazon actually has leverage in. It's a very calculated move to build a tablet
first and not a phone. The real target is driving more sales on Amazon.com

~~~
cageface
_But apps are actually a small chunk of dollars in the grand scheme of things
-- especially on tablets._

I think it's important to keep this in mind. As successful as Apple's app
store has been, 1 billion in profit is still relatively small potatoes.
Android's significant outpacing of Apple in sales despite a much weaker app
market underlines this.

------
jyap
Yeah, this is a very poorly written article filled with bad assumptions mostly
based on the current status quo.

Firstly the author is taking things too far by comparing the number of Android
phones with tablets. Amazon doesn't have an Android phone. But they will most
likely have the best selling Android tablet. And the argument is they may own
the Android tablet market which gives them tremendous leverage.

"Google does not care about facilitating app sales because they can make
15-30x the money from search."

Here's he's taking the overall figure for all of Google's search revenue and
just applying it to Android. That's not a fair comparison to app revenue. And
assuming that Search Revenue > App Revenue, therefore Google does not care.

"Google clearly believes that the web will win out in the long term and native
apps are a stop-gap, "

... Yeah, that's a big assumption based on a world before native apps.

"Amazon does not care about app sales... Kindle Fire is about selling more
digital content and facilitating e-commerce"

Except apps are digital content and are a huge growth market.

~~~
avichal
Thanks for taking the time to respond.

Android 4.0 and beyond is designed to run on both tablets and phones. From
Google’s perspective they are gateways to search so it’s completely reasonable
to compare them to each other. From Amazon’s perspective the user behavior
around commerce is very different, which is why they’re going after tablets
first. There are rumors they will build a phone later as well.

I’m not applying the overall search numbers to Android. I’m saying that the
amount of money they make off of Android pales in comparison to what they make
off search today and what they will make off of mobile search in the future.
App sales are going to be tiny compared to mobile search revenue (especially
if Google believes that the web will win out in the long run).

Yes, Amazon would love to sell more digital content — apps included. The gross
margins would be awesome for a retailer, so it’s clearly enticing for them.
But most of the transaction volume flowing through tablets is not going to be
in apps. It’s going to be in traditional e-commerce. As I said in the post,
the apps will be an awesome secondary revenue source for them. But what they
really want are all of the e-commerce transactions for electronics, movies,
ebooks, clothing, jewelry, and everything else that Amazon sells.

Put it this way -- getting you to buy 1 item of jewelry through Amazon.com
will be more profit than they'll get from all of the apps you buy over the
life of the Fire.

------
rbarooah
I'd say Apple cares about owing app distribution because it provides the
differentiation that increases the desirability of their devices. Without
distinctive software, Apple doesn't really have anything that can't be quickly
knocked off.

Google doesn't care about owning app distribution because they don't make
money out of devices so differentiation is a problem they leave to the
manufacturers. They just want to make sure Apple doesn't end up owning enough
of the mobile space to threaten Google's ad business.

Amazon cares about owning app distribution because retail distribution is what
Amazon does. As the retail of digital goods displaces the retain of physical
goods, Amazon seeks to establish its position in the delivery chain, or risk
losing out.

------
zmmmmm
I think Amazon embracing Android is great for Google in every respect.

Primarily because as long as the underlying platform doesn't branch too far
away, every dev who makes something for the Amazon app store is almost
certainly going to also make it for the Android Market. That means a huge
boost to the interest in making tablet friendly apps for Android and a huge
boost to the potential return from making an Android port (or an Android
exclusive app) for a developer.

But also it is great for Google because it validates all their arguments about
Android being an "open" operating system and will keep allegations of things
like anti-trust and other potential criticisms of Google's role significantly
muted.

------
rbarooah
_Google is a search company. Owning the platform is Google’s way of making
sure they own search. Google does not care about facilitating app sales
because they can make 15-30x the money from search._

It's interesting that an ex Googler who implies this is based on inside
knowledge would say this.

It illustrates how different their priorities from Apple, who care about 3rd
Party developers because they provide key differentiation that adds value to
the hardware.

Google's approach leaves differentiation to the individual manufacturers, so
the manufacturers have an incentive to want distinctive software on their
hardware. That's why we see the motoblur, sense, etc.

I suspect Samsung would love to operate their own App store, but of course
they can't because they'd lose Google's support.

~~~
nl
_I suspect Samsung would love to operate their own App store, but of course
they can't because they'd lose Google's support._

Samsung runs their own Appstore. So do most carriers (and NVidia has one
especially for Tegra devices).

Google doesn't care, and most developers ignore them because the Google Market
is where the action is.

(In Amazon's case it is different because the Google Market isn't installed)

~~~
rbarooah
So both stores ship on Samsung's devices?

Then I'd guess Samsung would probably be interested in not shipping the Google
Market.

I wonder what would happen if Samsung paid for an exclusive on a big name
title - e.g. a future Angry Birds

~~~
fpgeek
So far, Samsung's exclusives are more about special features / APIs (like apps
that use the Galaxy Note's pen).

------
strandev
Maybe third party devs care a lot about who owns app distribution.

~~~
avichal
Unfortunately third party developers will have to play in whichever app store
ends up winning on a platform. The only real leverage we have is en masse, and
that kind of growth/death in a developer ecosystem tends to take a long time
to play out.

------
b0sk
Seems to be a fitting reply to Marco's post.

