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Android Apps Grapple with Pricing Issues

But the operating system is still hugely popular, and some hope it will expand to desktop PCs


Google’s (NASDAQ:GOOG) Android operating system has been a popular topic of discussion this week, taking some of the focus away from Google’s PR problems over its privacy policy plan and data collection tactics. Although two research studies took Android’s pricing to task, an uncovered patent could hint at a personal computing future for the increasingly popular system.

Research firm Canalys released a survey showing that Android applications cost an average of 2.5 times more than apps for Apple’s (NASDAQ:AAPL) iPhone, with prices averaging $3.74 and $1.47, respectively. There’s an even greater price disparity for popular applications, which average $4.09 for Android and $1.04 for iPhone-related applications. Canalys attributes this in part to greater competition in the Apple application marketplace and the company’s selectivity in featuring apps in its App Store. Google’s Android Market offers more free applications, although developers of its fee-based apps tend to charge more for each of their offerings because sales volume tends to be lower.

In a bid to compete with Android Market, the Amazon (NASDAQ:AMZN) Appstore offers discounted prices on top Android apps, a tactic that’s working so well the two markets may soon be standing on even ground in terms of downloads and revenue. Research company Distimo conducted a study that compared 110 apps that earned a minimum of $200 a day in a sample week. The study found that 28% of the earnings came from the Appstore and that 42 of those app purchases earned more there than they did through Android Market. Those numbers are bound to rise in Amazon’s favor as more consumers purchase, and become adept at using, the Kindle Fire.

An Android app store war

Each of the Android app stores has pros and cons. Android Market has 14 times more apps in stock than Appstore , but only 32% of Android Market’s inventory are paid applications; the rest are available for free. Amazon Appstore has 65% paid applications, although many of its paid titles are offered at a competitive discount. Appstore’s smaller stock size could indicate it imposes stricter standards on the apps it offers, reducing the amount of time shoppers would have to spend to find gems.

An important point to note, though, is that app pricing issues don’t seem to be diminishing the popularity of Android. The larger issue is what the next step might be in Android’s evolutionary path. Rumors swirled this week that future Android versions will work on desktop computers alongside the mobile devices that all the apps were written for. Those rumors were bolstered with the discovery of a Google patent filing that refers to trackpad functionality in Android.

The patent isn’t conclusive, since it could merely refer to the mobile device’s ability to serve as a trackpad for a computer when it has been placed in docking mode, an option that’s already available. It’s too early to tell precisely what Google is up to, but adopting Android to personal computers would significantly increase its potential user base.

Android still faces developmental bumps in the road, including the continued delay of Android 4.0 updates, but it remains the Google product with the strongest growth potential. The official Android Market will likely become more streamlined in the future, and competition with the Amazon Appstore may bring prices down closer to those in the Apple range. Android has developed a culture around it, much like Apple has, and that culture is willing to withstand a bit of turbulence on the way to a better product.

Article printed from InvestorPlace Media,

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