Strong Assets Make Amazon a Credible Threat to the Market Leaders
This week Amazon announced that it has started to accept submissions for apps to be distributed in Europe. Currently its Appstore is only available in the US, but over the next few months it'll be available in France, Germany, Italy, Spain and the UK.
A move into Europe was a logical step given the similarities between the region and its established base in North America. Data from our App VU Global service shows that users in both regions are more likely to pay for apps than elsewhere in the world. In Europe, users in Germany and the UK have a higher willingness to pay for applications. Our data also reveals that the US and Europe are the most developed regions in terms of the number of downloads and the amount of revenue generated.
Since launching its US store in March 2011, Amazon's been steadily putting the building blocks in place to compete with rival stores. The size of its catalogue has been increasing: it grew 36 percent in the first three months of 2012 to reach over 33,000 items.
In April 2012 Amazon enabled in-app purchases. The store also offers improved discoverability of apps, try-before-you-buy and one-click purchasing. Almost two-thirds of the catalogue is made up of paid items, making it attractive for developers, especially given the markets in which it operates. Developers should also be encouraged by Amazon's decision to change how it splits revenue from paid apps. From July, developers will be paid 70 percent of the app's list price. Previously they received 70 percent of the sale price (which can be set by Amazon) or 20 percent of the list price, whichever was greater.
In Europe, Amazon must ensure it attracts local developers and offers content relevant to local needs. Our research indicates that most downloads originate from apps that are available in a local language. Although this is more important for countries like China, the observation also holds true in European countries like France and Germany. Some stores, such as RIM's BlackBerry App World, have struggled to gather support from local developers; RIM is trying to address this through its BlackBerry 10 Jam World Tour — a series of over 20 events across the globe to engage potential developers.
Publishers already distributing apps through the Appstore in the US will be relishing the opportunity to reach new markets. Amazon claims that developers will be able to select which countries they wish to sell their apps in, and set their list prices by market.
Although the Appstore is aimed at all Android users, I predict it'll increasingly focus on Amazon's own Kindle Fire tablet. The launch of European versions of the Appstore makes me think it won't be long before the company launches the Kindle Fire in this region.
The race is on to sign up developers and publishers, with Apple and Google unquestionably way out in front. But Amazon shouldn't be ruled out. It's a growing force in the app landscape and has been honing its abilities. It has some way to go before it matches Apple and Google in terms of catalogue size, publisher support and downloads. But early signs are encouraging. Amazon's large following of users and registered credit card details and its strong assets in retailing, content and cloud infrastructure make it a credible challenger to the market leaders.