Botched Android App Store Launch

Google is at risk of laying an egg with their botched launch of paid apps in the Android app store. The fur is flying in the app developer community, with many claiming to shelve or cancel development on the platform. To add insult to injury, they've gone into almost total public relations lock-down, refusing to even speak to anyone, including Android phone users and developers. How could they have gotten this so wrong.

As I have hinted in the past, I am involved with a company that has already published an Android app (it's doing pretty well, but then it is free), and we have plans to get into paid apps as one aspect of our business. This latest fiasco is worrying. Android is a truly open platform (thanks, Google) so there are alternative app stores that do not have the problems that Google currently has, but they also do not have the brand recognition or (yet) seamless integration with the phones. One aspect of being a small app developers is the value of riding on the coattails of that brand (just like Apple and the iPhone), which can justify the hefty 30% cut of revenue the brand demands.

Here is a list of the problems I know about. This is all second-hand so some of it may be unreliable even when reported by multiple sources. Paid apps are at present restricted to US and UK companies, and since we are in Canada we have no direct experience to report on (yet):

• Google Checkout: Used by few, supports very few countries and currencies. This constrains the addressable market.
• Currency: Apps are priced in the developer's home currency. Many individuals do not know currency exchange rates and are understandably cautious when faced with prices in foreign denominations. There may also yet be a backlash when they see exchange rate premiums on their credit card statements. In business it's always the best policy to price products in services in the customer's currency, and manage currency risk themselves.
• Trial period: Lots of confusion here and potential Google Checkout violation of their own terms. Game developers in particular are getting high returns since many users play with the game for 24 hours (and even longer, especially over weekends) then return it for a full refund. It is further unclear if the user can repeat the process ad infinitum.
• Copy protection: Breaks free and paid applications almost every time. Further, the method of protecting apps is so weak it is fairly easy for users to extract the application from the phone and do what they wish with it.
• Blame shifting: When problems are reported, T-Mobile directs users to the developers, and Google itself ignores complaints, while its written terms implicate the developers. Users and developers are both losers in the short term. Long term, if customer service isn't addressed the entire Android application eco-system is at risk.

A lot of these problems appear to be due to Google's decision to only support their own payment service, Google Checkout, rather than the more mature systems like PayPal. Near-term this has many problems, though it may work out in the longer term. It could in part depend on the transaction fees since there is a lot of overhead with PayPal, especially with transaction charges and currency exchange rates. From the numbers I've seen, iPhone developers probably see a 60% take of the revenue rather than the top line 70% advertised.

Everyone is waiting to see how Google works through these issues, and if they begin to open the lines of communications. The carriers themselves are looking at getting into the app store business, so they can expect some formidable competition if they don't use the next weeks and months to clean up their act. From my own perusing of the available paid apps, sales have been uniformly poor, and complaints about the problems by users has been discouraging. The clock is ticking.