Making Android Pay

Earlier this year I decided that for our small venture we would not publish anything other than free apps on the Android Market. Initially this was because of the woes of Google Checkout, but the trouble has gone far beyond that, and can no longer be attributed to Google's growing pains. It's a shame since there is a lot of potential with the built-in Android Market app on pretty much all Android phones: now over 3M out in the wild, and slated to grow to over 10M a year from now.

Google is putting precious few resources into Android Market and Checkout. You can count the countries from which developers can publish paid apps on the fingers of both your hands and still have one finger to spare. Improvements to Market and the Market app have been even slower in coming. I have to believe this is deliberate. It seems that, true to its knitting, Google is not keen on direct sales, preferring instead to distribute innovative and interesting technology and making their money on ad revenue. They won't spend, say, $5M to improve and extend Market (although probably even more for Checkout), but they will spend $750M to purchase AdMob.

Money is not the problem. The pace of improvements is glacial and the problems are widely known and discussed -- often with great vehemence. Rather than hope for better, I project forward from their known performance and reach my conclusion: the Android Market may never pay for the bulk of app developers. Even their most recent Android Market Developer Distribution Agreement only further emphasizes their disinterest in enabling paid apps. That is their right.

Despite this lament it has never been true that publishing mobile apps is the road to riches: precious few win at that game and I had no illusions. For me the attraction was product placement since every Android user has the opportunity to see and acquire our companies products with the built-in Market app, which is a cheap way (for us!) to build the core of a sustainable market. Every other method is either more expensive or attracts fewer eyeballs.

Carrier billing is a step in the right direction, but insufficient by itself: it addresses the limitations of Checkout but not Market. Carrier "channels" on Market seem to me to be more of a ghetto than a platform from which to get noticed. Verizon has made some progress -- well before introducing Droid -- with their own app store, and they may be further encouraged by early Droid sales. While this strategy will cause fragmentation and increase developer costs, it could relegate the Android Market to only being a pool for free apps. That will still be of immense value to Google and most developers, just not the path to commercialization for ISVs that are treating their businesses as more than a hobby. It is interesting, though a bit worrisome, that the enabling corporations in the field are not yet clear on how to proceed.

Carrier stores are perhaps the best hope for Android app developers. I am beginning to suspect that the Android Market carrier channels are no more than a short-term fix that will be replaced in 2010 with true carrier-sponsored app stores, and their own built-in market apps. I have indications from private sources that at least a few North American wireless carriers are moving in this direction. Exactly what these stores will look like and whether they will be better than Google's offering for app producers and consumers, I unfortunately do not know.

Which gets me back to my own sales strategy. Our view now is to use the Android Market as one way to generate awareness within the target market -- everyone with an Android phone -- and attempt to leverage that with sales through other channels. The legalities of the agreements that every developer is bound to by publishing to the Android Market must be carefully navigated but are not insurmountable. The freemium model can still work on the path we propose to follow.