Bringing an Android App Store to Market: Who Should Compete — and How

This week, Amazon began giving $25 in credits to its Appstore to customers who buy a Verizon Wireless Android through Amazon Wireless. It’s an aggressive move to bring attention to its fledgling app distribution business, which seeks to ride the coattails of Android’s ever-increasing momentum. Others are trying to compete with Android Market as well, from cross-platform mega-stores like GetJar and Mobango to smaller, Android-specific vendors like SlideME. And that list doesn’t include stores that are being launched by countless carriers like Verizon Wireless and T-Mobile USA.

Launching an app store is no small task, of course, and almost any newcomer to the game will face a tough challenge in attracting the attention of mobile developers who have an ever-increasing number of distribution channels to choose from. But mobile app revenues will only increase as smartphone usage continues to surge — MarketsandMarkets recently predicted unofficial app store revenues will eclipse those of the official vendors by 2015 as the market grows to $25 billion — so there is still ample opportunity to join the app-retail game.

And there are plenty of ways to differentiate when it comes to competing with Android Market: Amazon is wisely culling only the best Android apps — or so it says — in an effort to increase discoverability. BloomWorlds hopes to gain traction as a distributor of family-friendly Android titles. And Archos is focusing on apps for higher-end Android devices with larger screens.

Who else could benefit from building a mobile app distribution business? Here are a few candidates:

  • Facebook. The online community already has a massive user base and a payment mechanism in place, and it is extremely familiar with the developer community. It understands how the app era has given birth to new business models such as in-app purchases and offer-based ads. And it has experience in helping users find what they’re looking for in an enormous app library. Facebook’s popularity among mobile users is well documented, but building an app distribution business would allow the social network to own a much larger piece of the user experience — and create a new revenue stream.
  • Electronic Arts: EA’s massive mobile game portfolio teems with high-profile franchises like The Sims, Tiger Woods PGA Tour and Tetris, not to mention classics like Monopoly and Scrabble. But even those notable titles can get lost in Android Market or other app stores with a seemingly infinite number of titles on the shelves. An EA app store would draw plenty of traffic from mobile gamers tired of searching through overstocked warehouses.
  • Best Buy: The nationwide chain sells phones from all four tier-one carriers in the U.S., and it is honing its focus on mobile as it backs away from its big-box strategy. Also, it has years of experience in selling packaged titles to PC and console gamers, so it could package those titles with mobile versions of the games. Like Amazon, it could market the store by giving away credits to consumers who buy qualifying phones. An app store would help Best Buy build on its success in mobile (the company reported a “double-digit comparable store sales increase in mobile phones” during the recent quarter) and create enormous consumer stickiness as brick-and-mortar retailers increasingly look to online sales.
  • WebMD: This may be a stretch, I know, but WebMD is well positioned to leverage a market that will claim 500 million users by 2014, according to a recent forecast from research2guidance. The company’s sites reach 86.4 million users every month, and WebMD is largely supported by advertising — a model that is easily extendable to mobile. If WebMD could apply the same rigorous standards to mobile health apps that it does to its online services it could absolutely own the space.
  • Yahoo. It has become something of an afterthought among techies, but Yahoo still claims the third-most popular online destination in the U.S. A Yahoo store could play the same role as its website, aggregating apps from genres such as news, finance, sports and weather. It has long been active — if not all that successful — in mobile, and it is scrambling to bring an app store for its connected-TV platform to market. Extending that store to mobile might be relatively simple, and it could be key to attaining the relevance Yahoo has so long struggled for in wireless.

Question of the week

Who Else Should Bring an Android App Store to Market?