Best Buy mulling Android app store behind Amazon.com

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In the wake of multiple reports indicating online retailer Amazon.com is poised to roll out an Android application storefront to rival Google's own Android Market as well as efforts like Verizon Wireless' (NYSE:VZ) V Cast Apps, big-box electronics giant Best Buy said it is deliberating whether to launch an Android app store of its own. The Wall Street Journal reports that in response to a question about the Amazon app store, Best Buy CEO Brian Dunn said he would consider building one of his own. Best Buy CTO Robert Stephens later clarified Dunn's comments, stating "We are exploring this concept at this very early stage, but we have no concrete plans at this time. Google, though, is an obvious partner." Best Buy accounts for close to 20 percent of consumer electronics sales in the U.S. All stores include a Best Buy Mobile kiosk--in addition, the company operates 120 standalone Best Buy Mobile locations across the country, touting a host of carrier services handsets and accessories.

Expect the app store ranks to continue multiplying like rabbits, said Gartner analyst Ray Valdez. "New people will continue to introduce app stores--carrier telcos, device manufacturers, e-commerce sites," Valdez said. "But it will be like people having a fax machine--it is not a game changer, but just part of doing business."

Citing sources asked to sign NDAs about the initiative, TechCrunch reported late last month that the forthcoming Amazon app store will offer both premium and free Android applications--for each paid app sold, developers will receive either 70 percent of the purchase price or "20 percent of the list price as of the purchase date," a stipulation presumably in place to dissuade developers from selling their software at a discount via competing stores. Amazon will charge a $99 annual fee for entrance into its developer program, with no listing fee for apps--AndroidGuys later reported Amazon will waive the fee during the first year as a "token of [its] appreciation" for signing up.

Amazon's proposed App Store Distribution Agreement, obtained by SlashGear, confirms all applications will integrate DRM features to ensure they run solely on Amazon-approved devices. Amazon also will retain the right to modify app binaries, as well as "sole discretion to determine all features and operations of this program and to set the retail price and other terms on which we sell Apps."

Amazon.com reigns as the 800 lb. gorilla of the e-commerce segment. In the second quarter, the company reported profits of $207 million, up from $142 million a year ago, with net sales increasing 41 percent to $6.57 billion, compared with $4.65 billion in Q2 2009. Amazon's recent growth heralds a shift away from its roots as a marketplace for conventional merchandise like books and CDs: Less than three years after the launch of its Kindle ereader platform, Amazon already sells roughly twice as many ebooks as it does hardcover titles, and its Amazon MP3 music download service (the default music store on most Android phones) now makes up 12 percent of the U.S. digital music market. No less significant, Amazon's consumers are gradually migrating from the desktop to mobile--in July, the retailer said consumers worldwide ordered more than $1 billion in products via mobile device over the last 12 months.

Amazon is poised to capitalize on a mounting wave of discontent within the Android developer community. Although Google last week expanded Android Market's premium application distribution to include a number of new international locations, consumers still must first register for a Google Checkout account in order to download paid Android apps, except in areas where operator billing is available. Not only does Amazon already accept payments in more countries than Google Checkout does, but the website attracts more than 71 million unique visitors per month, many with credit card billing information already stored in their user accounts. Amazon also excels at promoting and recommending products based on each consumer's browsing and purchasing history, a skill that seems even more noteworthy in light of the app discovery challenges that continue to hamper Android Market.

For more on the Best Buy app store:
- read this Wall Street Journal article

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