With $25 Android App Giveaway, Amazon Shows Larger Ambitions

Amazon (s amzn) is giving new Verizon (s vz) Android customers who buy a phone on AmazonWireless $25 worth of credits for apps in its Amazon App Store. The promotion ends on May 1 and is limited to one carrier. But it’s another sign of how serious Amazon is taking its app store and how, in a larger sense, it is filling out an ecosystem that can one day be the basis for a killer tablet platform.
The app store promotion builds off Amazon’s already robust handset sales channel and provides a nice boost to the fledgling Amazon Appstore for Android (s goog), which launched last month and now boasts some 7,500 apps. It’s a small number compared to the hundreds of thousands of apps in Apple’s App Store (s aapl)or Google’s Android Market, but by pushing out a $25 discount in conjunction with Verizon, Amazon is showing that it is willing to get creative in promoting the store. Incentives might be a necessary step, because accessing the store requires a multi-step download process that can be tricky for some. AT&T (s t) also prohibits the downloading of third-party apps, which prevents its customers from using the Amazon App Store.
Amazon knows that it’s playing catch-up to bigger app stores and needs to get the attention of customers. It’s been giving away a free app a day and the company also offers a flexible pricing program that allows it to discount apps steeply, something that the International Game Developers Association warned its members about recently. This latest promotion shows that Amazon is intent on further using discounts to attract customers. It is also offering another $25 discount on upcoming ad-supported Kindles.
But while minor discounts are somewhat interesting, it’s the bigger picture that intrigues. It appears that Amazon is rounding out the necessary features for a potent digital store that can sit at the heart of a potential tablet experience. Amazon has yet to confirm that it’s working on a tablet despite rampant speculation. But with its ability to sell MP3s and stream videos and offer a huge e-book library through Kindle, Amazon has got the makings of a great content delivery system. Now, if it can make its Appstore a serious player with a lot of great titles at a good price, Amazon could put it all together into a very competitive, perhaps lower cost Android-based alternative to iPad and Android tablets.
The updated Nook Color from Barnes & Noble (s bks), which can supports an app store, shows that a simpler tablet with limited apps can be appealing at the right price. It’s also demonstrating that there are new opportunities for developers in the Android ecosystem.
Stepping back, it’s clear that Amazon is the company to watch in the tablet space. Amazon has the most customer credit accounts after iTunes, and a great recommendation engine and terrific discovery tools, which are both increasingly important as content builds up. The company also has a sophisticated cloud architecture that it’s putting to use, most recently in its new cloud locker music service. Outside the obvious need for hardware, Amazon’s Appstore is the one part of the equation that still needs a lot of maturing and customer support. That’s why I think you’ll see more discounts and promotions out of Amazon for its new store. The tablet market is just getting out of the blocks, and Amazon is proving it might have the chops to be a major contender.