Saturday, March 26, 2011

Amazon sells Android apps - why this move and what's the impact ?

This week, Amazon opened its Android app store.
Why is Amazon moving in this direction ? Is it just for money earned selling these apps ?

There are probably much better reasons for this move.

First, Amazon is by far the most successful Digital Shopping Mall in US and Europe. As any shopping mall, there is no reason why not to sell a product which is sold somewhere else. Amazon can not sell Apple iPhone and IPad apps since Apple behaves as a high end brand, restricting sales in its digital, fully controlled experience iTunes store. It's thus about "one-stop-shopping" and comprehensive digital goods proposition.

Second, through this move, Amazon clearly positions itself in the M-commerce business. Amazon becomes fully relevant for Android mobile users and the market place can collect mobile phones numbers of their current customers or recruit new customers. This critical information added to the Amazon account will further enable the giant to further close the loop, possibly engaging in mobile advertising or couponing.

That leads to the third and probably the main reason. Facebook, Apple, Google and Amazon form the FAGA quatuor heading to the same M-commerce expected nirvana, each attacking from a different angle. Google already partially controls the mobile platform real estate, a very good advertising machine and an emerging cash desk. Apple has a fully controlled platform real estate, an emerging advertising machine and an efficient cash desk. Facebook probably has the most efficient platform real estate, (now even extending to feature phones through latest acquisition), including the most innovative advertising machine and is currently building a cash desk.
Amazon is the king of E-commerce, already having all ingredients online but missing presence on mobile. Through this Android store, Amazon penetrates for a low budget an efficient mobile platform real estate to complement a too small Kindle footprint. Amazon is thus strengthening its position in this FAGA quatuor.

The next question concerns the impact on device vendors and mobile apps ecosystem. Will this help or arm Google ? Does it impact Apple ? What about Amazon selling windows phone 7 apps  or Blackberry apps ?

This Amazon Android app store on one hand is an additional factor demonstrating to consumers the openness of Android ecosystem. It can only thus increase relevance of Android phones. On the other hand, it probably arms Google in its quest to spread its Google Checkout, so important in the FAGA war.

Apple is probably not directly impacted, keeping their closed ecosystem and currently suffering (a lot of people would like to suffer this way) the consequences around censorship and too obvious dominance.
BlackBerry apps mainly concern business and are probably less relevant for both Amazon and Blackberry.

The open question remains for Windows phone and especially in the context the Nokia deal. Nokia stopped its unsuccessful OVI store. Amazon could probably be a good partner for Nokia selling special Windows phone apps. But will Microsoft authorize this or will Seattle monster engage in FAGA war to make it FAGAM ?

Future will say ...

Benoit Quirynen

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