Of all the questions associated with app development, the most popular, most obvious one has to be, “how do I make it pay?”Amazon recently took steps to address its reputation with cash conscious developers, making an interesting move of launching an in-app payment system that analysts believe will resonate with users.
But how does it compare to in-app purchase functionality from the other leading app stores? Could Amazon’s late-comer pose a serious challenge to the established market leaders?
A recent report by IHS iSuppli predicted that in app purchasing revenue could soar to $5.6 billion by 2015, with the freemium model becoming an increasingly popular technique with developers to generate revenue. Research firm NPD found that 40% of users were willing to make in app purchases after downloading an app for free.
The Amazon App Store has already proven popular with developers looking to generate in app revenue. One such developer Tiny Co. has reported that per user their apps in the Amazon app store are monetizing 80% better than in Apple’s App Store. So we decided to take a look at Amazon’s offering and compare it to its Google and Apple counterparts.
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As the chart shows despite the market dominance of Android (51.6% of market share in December 2011) Apple’s App Store has by far had the most app downloads to date, and is still making the most revenue per user. However, the Amazon App Store is not doing too badly in comparison despite its smaller selection of apps.
Some developers have previously raised concerns with Amazon’s revenue policy for app purchases. When Amazon launched its store last year, it reserved the right to set app prices itself, offering discounts regardless of the price the developer had suggested, this meant developers earned 20% of the price they wanted to charge, or 70% of what Amazon ultimately charged depending on which was greater. Regarding in-app purchase revenue, Amazon is matching the 70/30 revenue ratios of Apple and Google, although Amazon will still have the right to discount in-app purchases.
The benefit that Amazon and Apple have over Google is that they are both already well accustomed to taking payments. They already own large databases of credit card details, reducing friction for many users when they make want to make in-app purchases.
Android’s poor in-app revenue performance in comparison to Apple and Amazon point largely to Google’s lack of commerce experience compared to its competitors, though Android has all the characteristics of a sleeping giant waiting for the pieces to fit together. With new in-app payment solutions emerging all the time, many of them able to integrate with Android, Google could be only moments away from finding a way to convert its scalability and market dominance into revenue.
Amazon’s trump card is the integration of its popular one click payment service into the in-app SDK. Anyone who’s used Amazon services should be familiar with this system, which is partly responsible for the buzz around the system’s revenue earning potential. One click payment is something Amazon customers are already comfortable with using, and is proving to be effective in achieving in-app payments.
Time will tell if Amazon’s App Store will be able to rival the established market leaders, but for developers there are definitely exciting new possibilities being created with their new in app payments.
Issues for developers will be discussed in further detail at the free to attend Developer Zone and Droidworld workshops at Apps World on 2-3 October – www.apps-world.net/europe