App battle heats up

24 March 2011

NEW YORK: Competition is intensifying in the mobile apps sector, as major players like Amazon, Google, Microsoft and Apple all seek to attract an audience.

Online retailer Amazon has this week started selling applications for smartphones and tablets using Google's Android operating system.

The company's Appstore was introduced with roughly 3,800 such tools, including those for Newsweek magazine, Zagat's consumer-generated restaurant reviews and an offering from travel specialist Kayak.

"It's day one for us, and we're adding new apps every day," Aaron Rubenson, Amazon's category leader, mobile services, told the Seattle Times.

"There are literally hundreds of thousands of apps available, with new ones coming every day."

In promoting the latest addition to its portfolio, Amazon is providing one free application each day, and lets people "test drive" apps for around half an hour before choosing whether to buy them.

Leveraging its ecommerce site, the Appstore will also give visitors recommendations based on an individual's purchase history, for example suggesting recipe apps to someone who recently acquired kitchenware.

"While that breadth of selection is interesting, it can make it difficult for customers to select products that are relevant to them," said Rubenson.

"We focus on having great selection and helping customers find products that are right for them."

Ben Schachter, an analyst at Macquarie Securities, argued Amazon should benefit from its existing capabilities in the internet arena.

"The mobile apps ecosystem has its unique challenges, but we believe Amazon's strength in online retailing and digital delivery position it to be a leader here," he said,

Research firm Forrester estimates smartphone app sales will reach $4.5bn worldwide this year, and $1.1bn on tablet equivalents, totals expected to hit $29.4bn and $8.1bn respectively by 2015.

Sarah Rotman Epps, a technology analyst at Forrester, stated the fact Amazon already boasts an enormous customer base schooled in paying for goods via its interface might be advantageous.

"Consumers interact with Google all the time, but not with their credit cards," she said, adding that Amazon could "change the economics of apps" for Android as a result.

To date, iPhone subscribers have proved more willing to download paid-for apps than Android counterparts.

Apple's App Store contains 350,000 options - ahead of Amazon and Android's 130,000 - while the manufacturer of the iPad and iPod holds details about 200m credit card accounts.

"That's the coin of the realm - people who have secured their accounts with a credit card," Michael McGuire, a Gartner analyst, said.

"You have a lot a choices all coming back to that one credit card. Google certainly can't claim that."

McGuire added: "Developers will look at momentum. Will Amazon build new devices? How much is Amazon investing in its ecosystem?"

In an indication of the fierce rivalry now emerging, Apple has attempted to trademark the term App Store, and is suing Amazon for employing a derivative of it.

"Amazon has begun improperly using Apple's App Store mark in connection with Amazon's mobile software developer program," the organisation's lawsuit said.

"Consumers of mobile software downloads are likely to be confused as to whether Amazon's mobile software download service is sponsored or approved by Apple."

Microsoft, another possible actor in this area having rolled out the Windows 7 Phone, has previously also opposed Apple's moves.

"An app store is an app store," Russell Pangborn, Microsoft's associate general counsel said earlier this year.

"Like shoe store or toy store, it is a generic term that is commonly used by companies, governments and individuals that offer apps."

Data sourced from Wall Street Journal, Seattle Times, Financial Times, BBC; additional content by Warc staff