Amazon’s Kindle Fire made a big splash when it first hit the market in November of 2011. It was among the first low-cost, high-quality tablets to be offered to the public. Many wondered why Amazon would be willing to make and sell a tablet that cost the company more to make than they were selling it for. Industry analysts assumed that Amazon expected that media sales of books and movies for the device would be more profitable in the long run.
Now, according to Bloomberg, Amazon is trying out the in-app purchase phenomenon as a way to generate even more money from their device.
Freemium apps have been predicted to becoming the biggest market in Apple’s App Store and the company makes 30 percent on every in-app purchase made. This type of marketing is useful for the consumer, the developer and the app store owner. The consumer can download the app for free to try it out. The developer generates more downloads, making the app more popular, while still generating profits when in-app purchases are made. The app store owner makes a higher percentage of profits because many developers offer multiple in-app purchases that the Owner can earn revenue from.
According to Bloomberg, Amazon is dipping its toes into the in-app purchasing market with a test phase right now. Skimble, Inc. co-founder Maria Ly claims to have been involved in Amazon’s pilot program for about a month. “We really wanted to attack the Kindle Fire market, but also have access to the payment methods that support our business,” said Ly. The physical fitness program service company gets most of its sales from subscriptions and in-app purchases, such as workout regimens.
Brian Blair, analyst for Wedge Partners Corp said the move toward in-app purchase offerings would be a good one for Amazon because it would make the company more competitive in the app market. “Amazon needs to be positioned to capitalize on this,” Blair said in an e-mail. “It’s a smart model. Some of the best new apps in Apple’s app store are free so users can easily download and see the application, but to get any meaningful use, in-app purchases are required.”
Amazon’s Kindle Fire may have caught on for consumers, but its miniscule app store has not been able to keep up with the Joneses. Both Google and Apple have more than 450,000 apps available in their stores, while Amazon only has 1,400. If the industry has told us anything about the success of the tablet market it is that availability of apps is one of the most important thing for consumers.