Why Google Play is Good News for Developers

A recent article on Zdnet claims that the re-launch of Android Market to Google Play should cause developers concern due to enforcement policies. Although I understand that there is some concern on the enforcement of guidelines, many of which were already there, I think the article misses some more important points.

The reality is that managing the brand of a store like Google Play and the interests of developers is always going to be a balancing act. That means trying to manage the needs of consumers, developers, record labels, movie studios, regulators and many other competing interests. It's no secret Google Play is changing. All things do and must if they are going to evolve and improve. A new brand, new policies, new content, better merchandising, new people. I for one joined the team only a few months ago and was at a rival, independent app store for three years before that (as CMO of GetJar). So when it comes to rival app stores and open ecosystems I've seen that side of the fence too.

The Zdent article focuses on enforcement but never makes any mention of why Google Play is good for developers.  Here are some key facts that I think developers need to take note of:

1. The Google brand is one of the most popular, well known and well loved brands by consumers around the world. By tying the store to it's strongest consumer-facing brand, Google is, in effect, committing to the store to in a larger degree than it ever has in the past. And the success of the store depends on its content and much of that content depends on developers.

2. Google Play improves on something Android Market previously had not done well: it unifies all of Google's entertainment offerings under one singular web offering: play.google.com. This means easier access for consumers to discover, purchase and enjoy music, movies and books. This in turn means new consumers who come in looking for music will also discover apps & games. The same can be said of books, where Google actually has the largest ebookstore with over 4M titles. A rising tide lifts all boats.

3. Google Play opens the flood gates for doing something else that had been lacking in the past: marketing the actual store. Previously, the store had only really been marketed by carriers and handset vendors. Android Market, though a good brand, was an ecosystem / developer brand. That's not in itself a bad thing but it doesn't mean much to consumers. To truly unlock the power of the web and bring consumers from around the world to the store, Google needed a global brand to market. The results are already bearing fruit. The company has already begun heavily promoting the new store using ads on the web, mobile, through partners, new videos and even, this weekend and last weekend, by a heavy presence at events like SXSW and the Ultra Music Festival.

All this is good news for developers as it drives more awareness of not just movies, music and books but also of apps and games.   Does that mean everything perfect? No. There's still lots of work to be done and undoubtedly this is just the start. Let's face it, there will always be folks who are critical of Google and what it does but it's hard to argue that bringing all this content in one place, improving the consumer experience, marrying content to the Google brand and than advertising it isn't great news for developers.

I've been speaking to developers for weeks about the change and those I've spoken to are pretty thrilled, want to continue to engage Google and provide the company with even more feedback on how to continue improving the store. If anything, all these massive changes, though difficult and painful, mean Google is listening more to developers than ever not less. And guess what? that's the beauty of an open eco system. Google has to listen. Others don't necessarily have this luxury.   Nor do they care to... 

Madmork

Amazon: Overcooked, just right or raw?

Amazon's stock price took a beating Wednesday with its stock tanking 13% in a single day of trading after announcing less than stellar earnings and also some Q4 projections that could see the retailer even post a loss for the first time since 2001. So are the Wall St boys right or are they over-reacting? First, let's look at the flip side of the equation. Until recently, Amazon had actually, under some measures, been more richly valued even than Apple. If you compare PE ratios (price / earnings) you'll notice that up until Wednesday the stock traded at 119 times earnings. Compare that with Apple that trades around 14 times earnings and you have to question whether Wall St. was ever getting it right in terms of this stock. Second, I think you also have to think about what kind of company's Wall St. likes - nice smooth, predictable companies with smooth cash flows that reward investors. This is often times anathema to company's being able to make aggressive investments for future growth. Particularly in technology where product cycles and consumer preference often change quickly, companies have to be able to react quickly or face being left out of the market (Nokia, Microsoft, HP?). This isn't necessarily what investors like to hear. I mean would you prefer to get a higher dividend check or see a company increase capital expenditures? That really depends on your investment horizon for starters. So the truth is that Amazon is placing a big bet on the future. They're betting that a big part of their business will be the distribution and retail of digital content. This includes books, music, movies and apps. This really shouldn't have been a surprise to Wall St particularly given the launch of their Android App store and their focus on distributing music over the Web. In addition, the company has a history of making significant investments for the future. For many years Amazon actually lost money as it was growing its brand, distribution footprint and acquiring new customers. The good news today is that Amazon is a household name in many parts of the world and has an enormous user base of consumers who buy everything from MP3's to video games and now apps. They've also established themselves as a very good manufacturer and retailer of hardware with their line of Kindle products. Wall St.'s view on the Kindle Fire to me seems short sighted. Although they say each device causes a $10 loss, it's unclear what their assumptions are behind Amazon's ability to make money off content sales on this device. We know Kindle users purchase content since they primarily use it to buy books. With the Kindle Fire it's save to make a couple of assumptions: - They will acquire even more content since the device is even more powerful and also able to run more than simply books but also better suited to movies, music and apps - They have an established form of payment already integrated given that they will likely need an Amazon account (credit card included) to use the device So if you assume a consumer purchases at least one song or app per week at .99$ at a 30% revenue share to Amazon then that already earns Amazon an extra $14.25 a year which wipes out the loss on the device. Throw in Amazon's ability to cross sell other products, scale their buying power of components for the Kindle to bring down the cost and also the sale of higher value digital goods the picture becomes even better. So what's the problem? Simply put Amazon was overvalued. A number of investors made the comparison to Apple. This really isn't fair. Apple is a device manufacturer selling premium products at premium prices. Amazon is a retailer. It's a bit like comparing Apple to Walmart. Walmart business is about scale and selling millions of items at low margins. Fundamentally, Amazon is in the same business although they have their cloud services business and Kindle business which have better economics. The question becomes whether they can leverage their consumer relationships into something that provides better margins. So over-reaction? yes. However, overvalued also yes. let's see what Jeff Bezos comes up with next. Mad Mork