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Google's Android operating system may be a prominent fixture in the mobile world, but when looking at the app economy within it, Android is having a hard time competing with Apple and iOS.

One big reason: Android Market, Google's online marketplace for Android applications.

For some developers, Android Market has proven to be an impediment to success. Unlike Apple, which has created a vibrant ecosystem for paid apps via the ubiquity of iTunes, Google has forced consumers to purchase Android Market's paid apps using Google Checkout, which has relatively low adoption.

The friction around payments in Android Market is leading some developers to create their own payment solutions. If successful, those developers could reap the rewards from selling their Android apps without giving Google a cut.

Although Google theoretically stands to gain a lot from Android even without a huge piece of the paid app action, it would be foolish for Google to leave that money on the table.

Fortunately for developers, Google may finally be getting its act together. Yesterday, Google announced that it would be offering carrier billing for Android users on AT&T's network in the United States.

AT&T, of course, is the second largest mobile carrier there, so allowing AT&T customers to purchase Android apps by having the cost added to their AT&T bill, circumventing Google Checkout, is potentially an important development for Google and the Android Market.

Google says it will "continue to partner with more carriers to offer carrier billing options for their subscribers" and if it can do that on a global basis, Android will be better positioned to compete with Apple and the iPhone in the app economy. It will also be better positioned to compete against Windows 7 Phone.

Although it remains to be seen whether Microsoft's latest attempt to compete in the mobile arena will be a success or failure, Microsoft's Marketplace sports a fairly seamless app purchasing process. Which, incidentally, already includes carrier billing.

Photo credit: laihiu via Flickr.

Patricio Robles

Published 23 December, 2010 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2391 more posts from this author

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Simon Taylor

The Android Marketplace wasn't designed to be the walled garden solution that iTunes is.  So to judge it as a failure by contrast is to mis-understand it.  There are many emerging payment methods and trends that could well catch on.  Carrier billing for SMS has been a neat niche growth market for some services, and would probably extend quite well into apps.

Things get more difficult when dealing with commerce, services or subscriptions.  What if I buy something using my Ebay app and want to pay using PayPal?  How does carrier billing work then?

I for one, am not a fan of carrier billing.  It's VERY bad for the consumer, and puts more power in the hands of the carriers, that needs to be de-centralised.  I have no doubt it will play a role in the coming years, as Apps replace SMS as the preferred mode of two way consumer interaction.

Android marketplace could end up with very fragmented payment options, on a per carrier basis.  I look at what facebook are doing with facebook credits and virtual currencies as a way out of the millions of ways to pay mess at the checkout.  For the third world, and emerging economies, carrier billing services like Zong, or prepaid options like m-pesa or Obopay provide compelling abstractions...

For me "one bill to rule them all" isn't a fun idea.  I want financial control over who gets paid what, and when... and for that I need to be able to manage payments, and subscriptions via a financial institution or stored value account.  The PayPal wallet concept is right, it's just not nearly as well commercially integrated to the emerging marketplace as it needs to be!

over 5 years ago

Patricio Robles

Patricio Robles, Tech Reporter at Econsultancy

Simon,

I don't think this is about open versus closed. Android Market is a marketplace through which consumers with Android phones can download apps for their phones. One of Google's goals, if it wishes to have a sustainable and vibrant Android developer ecosystem, should be to make it as easy as possible for consumers and developers to meet.

For paid apps, Google has failed to develop a frictionless payment option (or suite of options) and this is not only reflected quantitatively in the numbers, but also qualitatively by the major developers who are looking to build their own billing solutions.

Carrier billing is a decent way to allow consumers, particularly those who don't have credit cards, to purchase mobile content.

over 5 years ago

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Eddie

I am not all that familiar with android's operating system, but it seems like they are on the right path with the marketplace.  It will be interesting to see what comes of their efforts.

over 5 years ago

Ed Stivala

Ed Stivala, Managing Director at n3w media

Whilst carrier billing sounds like a neat solution, I can't help thinking that reconciling payments back to developers from a variety of different sources will become a nightmare. I know it shouldn't but the realist in me just screams that it will. 

Perhaps Google imagined that the demographic deciding to buy Android based handset would be so unlikely to pay for Apps (in any meaningful volume) that 'billing' wouldn't be an issue. Maybe they would only be interested in stuff they could get for free. Just an off the wall idea and certainly not based on any substantial evidence. 

over 5 years ago

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Deepak

if it wishes to have a sustainable and vibrant Android developer ecosystem, should be to make it as easy as possible for consumers and developers to meet. It will be interesting to see what comes of their efforts.

over 5 years ago

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Danny - Internet Marketing

Android finding it hard to compete with Apple and iOS. Now thats silly. Google had to face competition right from the day they launched their search engine. And every time they came out winner. Most of the applications and softwares be it whatever were hugely successful. I am sure this time again they will beat the competition and rule the market with their free services. Waiting for the OS for laptops and PCs, I am sure MicroSoft will become past once it is launched.

over 5 years ago

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emlak

 I have no doubt it will play a role in the coming years, as Apps replace SMS as the preferred mode of two way consumer interaction. I know it shouldn't but the realist in me just screams that it will.

emlak dünyanıza açılan pencere emlak pencerem

over 5 years ago

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Dallas SEO

I had an android phone and to me, there is no comparison to an iPhone. So you can't use facetime video chat without Wif-Fi (yet), it is only a matter of time. The overall usability and stability of iOS is second to none, and if you think otherwise, your not paying attention. Apple has literally set the standard for how we interface with computers, not just the mobile market. So just as everyone catches up and starts to take over, they unveil some new paradigm changing technology or service that is lightyears ahead of the competition. More than any of that, Apple has some of the best customer service of any company I have ever dealt with. I have had ONE problem with an old Macbook in almost 10 years. They immediately made up for the mistake and gave me a bunch of free stuff on my repairs just for the hassle. Those are the reasons I think Apple will always come out a little on top. They really understand the customer.

over 5 years ago

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