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Shifting Equations in the App Store World – Who Benefits?

Have you ever guessed, what makes the ‘Androids’ and the ‘iPhones’ sell like hot cakes? I am sure you’d all agree that it’s the “Apps” that makes the meat and let these phones thrive. It would be interesting to probe into the workings of this very dynamic market and understand the strategic, some smart, and some self-defeating moves that players made to survive, succeed and perish.

Shifts in the ‘balance of power’

Apple guarded its flag with the Mac App store, and Google followed suite with an open source model to disrupt this with Android. And, it rightfully did, until Jeff Bezos changed the equation and introduced the Amazon marketplace with the ‘free app of the day’ drive, slashing down prices significantly on some its high volume, exclusive, top performing apps

Did Google feel that its sales were cannibalized? Well no, to the contrary Eric Schmidt sticks to his open-source spirit when he says that the goal of stores is to make money for the developers and not for Google to make revenue.

Android became an OS of choice for many manufacturers to power their devices quickly and easily enter the market. Riding on the Android bandwagon, like many others AMZ powered its Kindle Fire and fringe benefits; its own appstore got super busy with its rising Kindle Fire sales (only next to Apple) because it didn’t come pre-loaded with Google play.

Now, AMZ makes its next move and lures developers to sell in their marketplace rather than Googles and it succeeds. Developers make a lot more there than in the Google Marketplace.   Next, it slashes down the prices of apps significantly to compete with Google, and making the end users happy.

Developers sway away from Google Play in search of greener pastures.

No doubt the developer community has benefited greatly by having a choice of rival appstores. This exponentially increased their exposure to more end users and also gave them a greater bite of the revenue. For example Amazon Appstores’ per user revenue is higher than that of Apple App Store and Google Play! Also Google Play doesn’t allow an application to be switched between free to paid and back (though you can sell two different versions of the same app)

Google checkout restricts developers from distributing apps in more than 9 countries. Developers bypass Google Play to sell in other more lucrative stores. No surprise there.
Google Play is a HUGE marketplace with a zillion apps living there. Clearly then, finding an app of choice is quite a challenge. This has spurted another ecosystem of app search stores like Androlib and Appbrain, which use intelligent algorithms to navigate the Google store.

The Flip side, there always is one.

AMZ appstore is new and is built as a reactive move to Google Play’s weaknesses. AMZ’s success is largely tied to the Kindle Fire sales. Soon, AMZ might be in Google’s not-so-good-looking shoes especially because of the lowering adoption rate of Kindle Fire. With a steep spike of 16% market share, the growth has tapered down to 4%, more so with an increase in the number of different types of tablets with better form factors and features, Fire gets a tough competition to survive.

And as the Android fragmentation continues, the appstore wars worsen further. Developers would not want to post a new flavor of their app for each Android device and confirm to the legal regulations. They end up spending more time marketing and selling their app than creating apps which defeats the entire purpose of Android’s open source model.

But in this entire conundrum, what we have to remember is that the end users are driving this market. And, it will continue to grow and explode as long as they are downloading these apps for their various needs. Developers will monetize on this no doubt and why not. After all, it is not them who set the rules, what have they got to lose?

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