Is Google Missing The Mark On The App Market?

Everyone is well aware of the vibrancy of the iPhone App Store. While there are legitimate concerns over Apple's control of what apps can be published, there is no denying the financial success of many iPhone titles. Independently developed titles, often created by individual programmers, are earning their creators as much as a quarter of a million dollars (or more). The 70/30 split, net 30 day terms and the 'meritocracy' of the App Store have been well documented.

Given this background you would expect Google to have paid attention and they have.

Taking note of the concerns about Apple's oversight of apps, Google will have no approval process for the software, creating an open content distribution system. Opening Oct. 22, initially all applications will be free. Developers can submit apps without the requirement of a business relationship with Google. It will be interesting to see if carriers will maintain a hands off approach to all free apps, given restrictions that TMobile has imposed on VOIP apps in Germany, to cite a recent example. So the question is, what will be the policy for paid apps?

mocoNews is reporting in an article titled:

G1 Live: The Android Market Is No App Store For Better And For Worse the following:

"It will purely be an arrangement between the carrier and the mobile app developer. It is unknown what the revenue-share agreement will be between the carrier and a developer.”

Traditionally carriers have taken 45% to 50% of content transactions. T-Mobile has been quoted, in reference to it's own "App Store" for other handsets:

“A baseline for the developer’s initial cut is 50 percent, and then based on certain perimeters, it may increase to 70 percent (remember, the App store currently has an across the board 70/30 split with developers). First off, the revenue split is determined by the amount of bandwidth the applications use, but developers can boost up their percentage by abiding to a couple of rules. The first is by providing customer care through at least two access points, such as a phone number and email. Another way is by supporting at least 10 TMobile devices, two of which being the most popular in the network.”

(@CTIA: T-Mobile USA Details Dev Program; Android, Sidekick Not In Plans At Start)

Much of that isn't relevant to the Android phone, but we can assume that T-Mobile is also aware of Apple's 70/30 split.

The problem isn't just the revenue share. It's that Google, by handing off the sale of paid apps to individual carriers, have added an element of 'friction' to the entire publishing process:

With existing content sales carrier terms are typically net 60 to 90 days.

What's more if you sell in multiple territories, then you will have to deal with multiple carriers.

Also, while there is an unfettered process for free apps, paid apps will certainly be subject to a review and approval process if for no other reason for issues of insuring appropriate content. What will that approval process entail?

So has Google missed the mark here? Well, one can see some benefits here. While every iPhone customer is signed into Apple's iTunes billing system, this isn't the case with Google's phone. Billing to the customer's phone account does solve that problem.

What Google needs to do is to reduce the uncertainty facing developers by addressing some of these unknown issues; revenue share, approval process, terms of payments, etc. The carriers have never had a reputation of being easy to deal with, but given the example set by Apple there are strong incentives for them to match the deals and terms set by Apple. Still, multiple territories will require additional work compared to the single-point-of-contact Apple is providing.

The more 'low-friction' publishing opportunities there are for developers, the better. I'm sure Google recognizes the value of a vibrant market, it will be interesting to see how they addresses these issues.

Comments

[bikingbill]

Yes Scott, In fact I was being 'kind' about the carriers.

I have some ideas on the Google App Market, there may be a "third way" to deal with it.

Stay tuned.

[Scott Miller]

Thanks for the article. I have had my share of trying to deal with the carriers with MojoBaby. I can say with absolute certainty that the carriers are not as bad as you may think... They are worse :)

This is exactly why we have held off developing for anything beyond iPhone and Smartphones. I was really excited about developing for Android before I read this :(

-Scott

Scott Miller
Founder/COO
MojoBaby Inc.
www.mojobaby.com

[bikingbill]

Google needs to recognize the value of the Apple App Store and address these concerns. Google does have a billing system in place, Google Checkout, so they could act as a single point of contact for app sales. It will be interesting to see how this plays out.

[Oliver Starr]

Well, I guess about now I can start feeling smug and say "I told you so". The fun part is I really did tell people that this was the big question about Android and I can prove it. In an article I penned for the Register Developer several months ago no less: http://www.theregister.co.uk/2008/01/09/android_developer_choice/

In that piece I pondered the question of how developers were going to generate revenue when developing for Google and that question, far from being answered appears to be as murky as ever.

What does this mean? It seems to me that it means that the smart money (or the smart developer really) is going to bet on the sure thing which is the Apple App Store. After all, if one guy in his garage can pull in a cool quarter of a million buck in just a couple of months then why risk the time, energy and frustration of being forced to deal with the arbitrary and capricious nature of the carriers, the requirement to port to multiple devices (especially considering that so far only one device is running Android) and the fact that the carrier could change terms for the worse and screw you even more than you're already being screwed at any moment.

While the App Store may be frustrating and have certain limitations that seem unfair, at this point it is certainly a far more known evil than the one that Google's version of "open" seems to be offering.

Oliver Starr
http://owstarr.com