Amazon will take over Android app distribution
Assume the Kindle Fire will sell very well, even though it needs a lot of help. — The only way most Kindle Fire owners are going to be installing apps is from the Amazon Appstore for Android. The Fire doesn't ship with Google Market …
Context & Ripple Effects
The Kindle Fire ships this week without Google Market, which makes the Android Kindle Amazon spent most of 2011 building a closed storefront play: per the article's own framing, the Amazon Appstore is effectively the only way most Fire owners will install apps. That closes an arc that began with speculation in March and ran through leaked sales numbers suggesting the Fire could outsell the iPad and early demand signals in October.
The economics explain why Amazon would want it this way: IHS iSuppli's teardown put the Fire's build cost at roughly $202, about matching its selling price, so the device itself earns little or nothing — the Appstore and media catalog are where the money has to come from. ChangeWave's survey already called the Fire the first non-iPad tablet to generate meaningful buyer demand, so whatever channel controls its apps controls a real audience.
First-order effects
- Amazon becomes the de facto gatekeeper for every app a Kindle Fire owner can install, with its review process and merchandising standing between developers and the fastest-selling non-iPad tablet.
Second-order effects
- Google loses app-distribution control over a major new Android-class device at launch, and developers targeting the Fire's installed base must now maintain an Amazon Appstore presence alongside Market rather than treating Market as the single Android channel.
Third-order effects
- If the pattern holds — a near-cost tablet (per the iSuppli teardown) monetized through a proprietary storefront, with a rumored larger 8.9-inch followup reportedly planned for mid-2012 — Android fragments into Google-certified devices and vendor-forked ecosystems with independent app stores, weakening Market's position as Android's default distribution point.
The trend: Android is splitting into Google-controlled and vendor-forked variants, as hardware makers like Amazon trade Market access for their own storefronts and content revenue.