Uncategorized

Google Glass from the Subject’s Perspective

Last week I had the honor and pleasure of being the first ever subject of a press interview conducted using Google Glass – followed up by a very interesting discussion with Robert Scoble. Here are some of the insights we’ve discussed, as well as some subsequent insights.

Screen Shot 2013-04-26 at 5.18.52 PM

Photography and Video will be impacted First

Consider how phone-based cameras have changed photography. My eldest daughter is almost 9 years old. We have a few hundred images of her first year, and about 10 short videos. My son is now 18 months old, and as my wife was preparing his first scrapbook album last week, she’s browsed through several thousand digital photos. On my phone alone, I have dozens of video clips of him doing everything you can imagine a baby doing and some things you probably shouldn’t. The reason is simple – we had our smartphones with us, they take good photos and store them. And should I mention Instagram?

Google Glass takes this to the extreme. With your smartphone you actually have to reach for your pocket / bag, click the phone app, point and shoot. Google Glass is always there, immediately available, always focused on your subject, and hands-free. Video photography through Google Glass is vastly superior for the simple reason that your head is the most stable organ in your body. What all of this comes down to is simply that people will be shooting stills and video all the time. Have you seen those great GoPro clips? Now consider having a GoPro camera on you, ready and available – perpetually. There will not just be a whole new influx of images and video but new applications for these too. Think Google StreetMaps everywhere, because the mere fact a human looked somewhere, means it’s recorded in some server. In the forest, in your house, and in your bathroom. Not sure about the latter? Check out Scoble’s latest adventures…

Useful Augmented Reality – Less will be more

Having information overlaid on top of your worldview is probably the sexiest feature from the perspective of us geeks. The promise of Terminator-vision / fighter-pilot displays provides an instant rush of blood to the head. And surely overlaying all of the great Google Places info on places, Facebook (well – Google+) info on people, and Google Goggles info on things – will be awesome, right?

Well, my perspective is a little different. After the initial wow effect, most of these will be unwanted distractions. Simply put – too many signals become noise, especially when it’s human perception that is concerned. This lesson has already been learned with similar systems in aerospace settings – and there the user is a carefully selected, highly trained individual, not an average consumer.

The art and science will be figuring out which of the hundreds of subjects visible is actually of interesting enough to “augment”. This will require not just much better and faster computer vision (hard!) but much better and deeper understanding of these subjects – which one’s really special for me, given the context of what I’m doing, what makes it so, and when to actually highlight it. Give me too much signal and I will simply tune out, or simply – take the damn thing off.

Achieving this requires a deeper understanding both of the world and of the individual. Deeper, more detailed POI databases (for places), product databases (for objects), and more contextual information about the people around me, what their contexts are – and what is mine. It is almost surprising to what degree this capability is non-existent today.

Initially – Vertical Applications Will be Key

Consider the discussion of video photography above. Now put Google Glasses on every policeman and consider the utility of simply recording every interaction these people have with the public. Put Google Glasses on every trainee driver and have them de-brief using the recorded video. Or just take it with you to your next classroom. Trivial capabilities like being able to tag an interesting point in time and immediately go back to it when you re-play – how useful is that?

And considering augmented reality – think of simple logistic applications, like searching a warehouse, where the objects are tagged with some kind of QR code, and a simple scan with your eyes allows you to get a visual cue where they are. The simple applications will deliver immense value, drive adoption, experience, and through those – curiosity and new, further reaching ideas.

And if you stuck around this long – here are my most amazing revelation:

  • Wearing Google Glass grows your facial hair!

Proof:

Sergey Brin Google Glass       Scoble Google Glass         Tim Google Glass

  • Google Glass vide makes you photogenic – watch Scoble’s interview of me and compare to my usual ugliness…
Uncategorized

The Case for Siri

Since Siri’s public debut as a key iPhone feature 18 months ago, I keep getting involved in conversations (read: heated arguments) with friends and colleagues, debating whether Siri is the 2nd coming or the reason Apple stock lost 30%. I figure it’d be more efficient to just write some of this stuff down…

siri icon

Due Disclosure:

I run Desti, an SRI International spin-out that is utilizes post-Siri technology. However, despite some catchy headlines, Desti is not “Siri for Travel”, nor do I have any vested interest in Siri’s success. What Desti is, however, is the world’s most awesome semantic search engine for travel, and that does provide me some perspective on the technology.

Oh, and by the way, I confess, I’m a Siri addict.

Siri is great. Honest.

The combination of being very busy and very forgetful, means there are at least 20 important things that go through my mind every day and get lost. Not forever – just enough to stump me a few days later.  Having an assistant at my fingertips that allows me to do some things – typically set a reminder, or send an immediate message to someone – makes a huge difference in my productivity. The typical use-case for me is driving or walking, realizing there is something I forgot, or thinking up a great new idea and knowing that I will forget all about it by the time I reach my destination. These are linear use cases, where the action only has a few steps (e.g. set a reminder, with given text, at a given time) and Siri’s advantage is simply that it allows me to manipulate my iPhone immediately, hands-free, and complete the action in seconds. I also use Siri for local search, web search and driving directions.

Voice command on steroids – is that all it is?

Frankly – yes. When Siri made its public debut as an independent company, it was integrated with many 3rd party services that were scrapped and replaced with deep integration with the iPhone platform when Apple re-launched it. Despite my deep frustration with Siri not booking hotels these days, for instance (not), I think the decision to do one thing really well – provide a hands-free interface to core smartphone functionality (we used to call it PIM, back in the days), was the right way to go. Done well, and marketed well, this makes the smartphone a much stronger tool.

But I hate Siri. It doesn’t understand Scottish and it doesn’t tell John Malkovich good jokes

As mentioned, I’ve run into a lot of Siri-bashers in the last year. Generally they break down into two groups. The people who say Siri never understands them, and the people who say Siri is stupid. I’m going to discuss the speech recognition story in a minute (SRI spin-out, right?) but regarding the latter point I have to say two things. First, most people don’t really know what the “right” use-cases for Siri are. Somewhere between questionable marketing decisions and too little built-in tutorial, I find that people’s expectations of Siri are often closer to a “talking replacement for Google, Wikipedia and the bible” than to what Siri really is. That is a shame; because the bottom line is that it is under-appreciated by many people who could really put it to good use. Apple marketing is great, but it’s better at drawing a grand vision than it is at explaining specific features (did I mention my loss on my AAPL?). While the Siri team has done great work at giving Siri a character, at the end of the day it should be a tool, not an entertainment app (my 8-year old daughter begs to differ, though).

OK, but it still doesn’t understand ME

First, let me explain what Siri is. Siri is NOT voice-recognition software. Apple licenses this capability from Nuance. Siri is a system that takes voice recognition output – “natural language”, figures out what the intent is – e.g send an email, then goes through a certain conversational workflow to collect the info needed to complete that intent. Natural language understanding is a hard problem, and weaving multiple possible intents with all the possible different flows is complex. It is hard because there is a multitude of ways for people to express the same intent, and errors in the speech recognition add complexity. Siri is the first such system to do it well and certainly the first one to do it well on such a massive scale.

So what? If it doesn’t understand what I said, it doesn’t help me.

That is absolutely true. If speech is not recognized – garbage in, garbage out. Personally I find that despite my accent Siri usually works well for me, unless I’m expressing foreign names, or there is significant ambient noise (unfortunately, we don’t all drive Teslas). There are however some design flaws that do seem to repeat themselves.

In order to improve the success rate of the automatic speech recognizer (ASR), Siri seems to communicate your address book to it. So names that appear in your address book are likely to be understood, despite the fact they may be very rare words in general. However this is often overdone, and these names start dominating the ASR output. One problem seems to be that Nuance uses the first and last names as separate words, so every so often I will get “I do not know who Norman Gordon is” because I have a Norman Winarsky and a Noam Gordon as contacts. I believe I see a similar flaw when words from one possible intent’s domain (e.g. sending an email) are recognized mistakenly when Siri already knows I’m doing something else (e.g. looking at movie listings).

This probably says something about the integration between the Nuance ASR and Apple’s Siri software. It looks like there is off-line integration – as in transferring my contacts’ names a-priori, but no real-time integration – in this case Siri telling the ASR that “Norman Gordon” is not a likely result. Such integration between the ASR and the natural language understanding software is possible, but often complex not just for technical reasons but for organizational reasons. It requires very close integration that is hard to achieve between separate companies.

So when will it get better?

It will get better. Because it has to. Speech control is here to stay – in smartphones as well as TVs, cars and most other consumer electronics. ASRs are getting better, mostly for one reason. ASRs are trained by listening to people. The biggest hurdle is how much training data they have. In the early days of ASRs, decades ago, this consisted of “listening” to news commentators – people with perfect diction and accent, in a perfect environment. In the last year, more speech sample data was collected through apps like Siri then probably in the two decades prior, and this data is (can be?) tagged with location, context and user information, and is being fed back into these systems to train them. And as this explanation was borrowed from Adam Cheyer, Siri’s co-Founder and formerly Siri’s Engineering Director at Apple – you better believe it. We are nearing an inflection point, where great speech recognition is as pervasive as internet access.

So will Siri then do everything?

That’s actually not something I believe will happen as such. Siri is a user interface platform that has been integrated with key phone features and several web services. But to assume it will be the front-end to everything is almost analogous to assuming Apple will write all of the iOS apps. That is clearly not the case.

However – Siri as a gateway to 3rd party apps, as an API that allows other apps that need the hands-free, speech-driven UI to integrate into this user interface, could be really revolutionary. Granted – app developers will have to learn a few new tricks, like managing ontologies, resolving ambiguity, and generally designing natural language user experiences. Apple will need to build methodology and instruct iOS developers, and frankly this is a tad more complex than putting UI elements on the screen. Also I have no idea whether Siri was built as a platform this way, and can dynamically manage new intents, plugging them in and out as apps are installed or removed. But when it does, it enables a world where Siri can learn to do anything – and each thing it “learns”, it learns from a company that excels at doing it, because that is that third party’s core business.

… and then, maybe, a great jammy dodger bakery chain can solve the wee problem with Scotland with a Siri-enabled app.

Oh, and by the way – you can learn more about Siri, speech, semantic stuff and AI in general at my upcoming SXSW 2013 Panel – How AI is improving User Experiences. So come on, it will be fun.

Mobile Platforms, Online Media

My Birthday Gift: The Kindle Fire, and Why It’s The First Credible Android Tablet

Over the past 6 months, I’ve been watching perplexed as vendor after vendor launched Android Tablets into the market with no success. Perplexed for a simple reason – I could not understand how they expected consumers to buy their $559, $499 or even $399 tablets when they could get an iPad 2 for $499 and get the real deal – the TRUE status symbol, the best content & app eco-system. What were Samsung, Motorola, Dell and Asus thinking, I was wondering. Was it a shortage / price of components that pushed them to that price bracket? Was it protecting the brand at all costs, even failure?

A couple months ago, I asked a question on Quora and the results were staggering – over 20:1 for iPad.

So what has changed?  The $199 Kindle Fire. You can get two of those, and still have money for another holiday gift.

Amazon’s Kindle is an ecosystem, not a device. Amazon sees it as a way to make sure you buy all your content – books, music, TV – from Amazon. Just yesterday they announced the streaming deal with FOX TV – more free content for Amazon Prime subscribers. Guess which devices will feature it? Remember Sony’s Howard Stringer’s announcement a few weeks ago – “Apple makes an iPad, but does it make a movie?“. Amazon doesn’t make them, but it sure-as-hell moves them around. In a move right out of Steve Jobs’ books, Amazon is tying it all together – device, app store, content store, streaming rights (with free content for Prime members), e-commerce for physical goods, payment options (from one-click to credit cards), cloud storage, even a loyalty program!

Kindle now touches everything Amazon does, and so many other companies. It threatens Netflix streaming – Amazon is securing more content for Prime members, and has a sound pay-TV model with a complete eco-system around it and it obliterates all other Android tablet manufacturers volume forecasts for the holiday season (a $200 rival with a strong brand behind it).

And it’s a credible contender for Apple’s eco-system. It is as broad, as far reaching, and goes even further with physical e-commerce embedded.

Probably the only risk is execution. If the software / hardware is good enough (defined as – better than most Android implementations), this will make a huge dent in the market. iPad will become the high-end product, but Android, through Kindle, could be the mass-market. Not so different from iPhones and Androids, actually.

My pre-order is in.

Mobile Platforms

How I Got It All Ass-Backwards, or How Android Got Free Again

Free!

Last week I wrote a piece about the huge cultural gap between Google and Motorola, and how Motorola is such an bad fit for the Google organization, and what it will do for it’s relationship with Android licensees. I also stated that if Google acquired Motorola for the patent portfolio alone – that’s not such a big deal in the marketplace.

Well boy was I wrong. A person who’s very close the story saw fit to fill me in.

Google’s acquisition of Motorola was indeed all about the patents. But not necessarily Google’s lack thereof, but really its licensees’. What Google is trying to do to the handset market is what Microsoft did to PCs – give the hardware market to cheap Chinese / Taiwanese / Korean manufacturers, and thereby own the software platform. The catch? The incumbents – Nokia, Apple, Microsoft (and Motorola) own restrictive patents. And they sue / charge these manufacturers to a point where they are agnostic between Google’s “free” OS and Microsoft’s “pricey” one. The only player in the Android camp who was relatively safe was Motorola, who owns a nice portfolio developed over many years.

Solution – Google buys Motorola and promises Android licensees a defensive umbrella – it will fight their patent wars for them with its newly acquired arsenal.

Right there and then, Android is free again.

So what is Google to do with the Motorola organization one might ask?

This is where it gets pretty interesting. You see Motorola is in Illinois. The state a certain president (and his associated mayor) come from. And 2012 is an election year. Who wants to see 10,000 layoffs in Illinois on an election year? Certainly not someone who wants to Do No Evil…
2012 Election

Mobile Platforms

Google acquires Motorola. Say again?!

With so many so-called experts (read: people who use Google and used to have a Motorola RAZR phone) providing different angles on this acquisition, I figured it’s time to chime in. I have a pretty good handle on Motorola (you can Google that!) and think I know something about Google too.

And what I don’t get is the culture clash. Truly. Motorola, like it or not, is an 83-year old Chicago (well Schaumburg) company, and no, the split to MMI and MMS did not change that. It is a slow mover 18,000-employee corporation, with an organization that takes years to design products, and even under Sanjay Jah that could not change much.
You see, when a company is hit as bad as Motorola Mobility was hit in 2008-2009 (and by the way – that happened through their complacence over the success of the RAZR), the good, dynamic, innovative people tend to leave. Especially in a market where Google, Facebook and Groupon are snatching all the good people who’d still like to work for a “safe” company. The culture has not changed all of the sudden, nor was there a good reason for great people to join lately.

Google is, or aspires to be, a fast-mover Silicon Valley company with a flat hierarchy, a market-driven (really numbers-driven) no-nonsense approach, with little respect for old-world processes. And it wants to retain this culture while growing to 25,000 employees.

See the issue?

So if, as some people have suggested, Google is only after the patents and will spin out Motorola again as a stand-alone device manufacturer, not so much has happened in the market (but congratulations to all the lawyers, accountants, bankers and management consultants who’re going to get the fat checks).

But if Google is truly looking to become the anti-Apple and the Motorola team is its weapon-of-choice… well, good luck with that.

P.S.: I especially like the theory that Microsoft was going to buy Motorola which forced Google to buy them first. It’s just lovely.

Mobile Platforms

Amazon’s Android Appstore (Tries) To Take Care of Business

So – the fabled Amazon Android Appstore (not App Store! That’s an App-le trademark!) is here. And almost as expected – these guys get the big things right, but the small things…

First thing you’ll notice -The Amazonian design. Besides the obvious branding elements, It is a much more effective design than Google’s. It is meant to generate sales. As soon as you open the store, you’re faced with credible alternatives – stuff you may well want to download, cause everyone else does. The screen space is used efficiently, and navigation is simple and easy. Very little innovation over, say iTunes, but also no clear disadvantages. The desktop web store is similar in approach, and not very far from the Amazon website that is so effective with retail shoppers in general.

The main attraction is a featured, “bonus” download, updated every day (i.e. a product that is usually not free being given away for free). Amazon takes care of business. To make an app store a business, you need paying customers. This requires people to have a payment method. That’s a hassle. That requires an incentive – give them something for free. But force them to connect a payment method to get the free stuff. Makes perfect sense. And gets me Angry Birds Rio for free. It also keeps me coming back every day for something else. Yes, it costs Amazon something. But probably not a lot. You see app developers have a great incentive to be providing these downloads for virtually (or literally) free – that day you were featured and provided as a free app, is going to put you very high in the Top Downloads chart – which will get you paid customers the following weeks (note the Top Downloads in the screenshot – yesterday’s free download, and today’s…). So even if Amazon pays virtually (or literally) nothing – it’s still a great deal. Everyone wins.

Caveat emptor – this also needs to work. The Appstore requires you to set up one-click mobile purchasing to get the download (as it should). However – no matter how many different ways I tried to do it, and despite the fact that all my info is shown, and my account shows mobile one-click purchasing activated (even when I connect on my desktop through a browser) – it still asks me again and again to “please add a payment mehod in your 1-click settings”. Now I am a loyal Amazon customer – Prime, Amazon Store Card and all that. My guess is that Amazon is not accepting its own store card on its own Appstore. Otherwise I don’t see how such a blatant bug could have slipped their people.

So – as expected, these people mean business, and know how to do it. They’ll have to cross a few t’s and dot a few i’s before they do, however.

Mobile Platforms

Post MWC: Android’s Tour-de-force. Is that the shape of things to come?

Over the last week I’ve had several discussions with colleagues about MWC 2011. The general gist of things was “wow, how far Android has gone”. And indeed, Android’s presence at the conference was impressive, to say the least. The usual Android suspects were there, of course – HTC, Motorola, Samsung and others. But what was even more impressive was the vast number of unknown Android manufacturers, mainly Chinese, who’ve flocked to the free platform en-masse. Known names like ZTE and Huawei were to be expected, but upstarts like Malata (who seems to make impressive Android tablets, incidentally) were there by the dozen. And of course – given Nokia’s and Apple’s absence, and RIM’s limited presence, it sometimes seemed like Android is the only game in town.

Malata Android Tablet

The Nokia / Microsoft news just fanned the fire. Essentially while it is a feather in Windows Phone’s cap (not necessarily a beautiful peacock feather, incidentally), it means that Nokia will be out of the smartphone game for a long time. And to judge by the employees’ reaction – could be long indeed.

The general conclusion I heard drawn, then is simple – Android is taking over the market, Android will define the shape of things to come, Android is where to take your mobile start-up / corporate mobile app first cause that’s where all the users will be. Right?

Sorry, it’s not that simple. Contrary to what some people think, Android to phones is not going to be Windows to PCs. At least not in the next 2-3 years. There are many reasons, but I think the most important one lies in the personal relationship between consumers and their phones. Unlike PCs (at the time), phones are a means for personal expression both explicitly (as in what you put on them / use them for) and implicitly (as in making sure your peers know what you have – just like cars). Most smartphone users associate their phone selection and habits with their identity. And with identity, a “one size fit all” strategy doesn’t work, fortunately. So as long as there are technologically credible alternatives with a well differentiated product (e.g iPhone, BlackBerry), they will draw significant audiences.

Furthermore, the wider Android spreads as a mid-market solution, the less appealing will it be to some of these people who seek to distance themselves from “the middle”. Think the Mac cult of the ’90s and early ’00s but at a wholly different level. After all – these devices are used in the open. People see what you use, so better pick the “right” one.

So clearly – the fragmentation in the smartphone space is going to continue. Each platform’s market segment will be different demographically and psycho-graphically,  and these compositions will continue evolving. I expect we’ll keep seeing Android pandering mostly to the mid-market (with of course a meaningful number of power-users and high-end customers too). iPhone will generally remain a high-end phenomenon. BlackBerry may well lose its hold on the enterprise, but acquire new audiences amongst the young and price-conscious (free messaging). And when Nokia eventually rolls out Windows Phone handsets, it is quite possible that their considerable distribution clout in European and Emerging markets will make this a meaningful platform for those audiences.

I believe a very similar phenomenon will be seen in tablets. While Android tablets are improving, the good ones are still not meaningfully cheaper than the iPad. Apple only needs some minor improvements with the anticipated iPad 2 in order to stay in the lead. Only when significantly cheaper tablets (probably running Android 3.0) will come to the market can the balance be upset. And what will we have then? A similar market structure with iPad as the premium product and Android tablets as cheaper, “good enough” devices for mid-market consumers.

Where does this leave the Android makers? With the proliferation of Chinese manufacturers with great pricing power, we will see the PC-wars re-enacted. Margins will drop to low single digits for most manufacturers, probably leading to consolidation and elimination of key brands.

So essentially – nothing earth-shattering really came out of MWC. We will see even more Androids, Symbian and MeeGo are dead (duh!) but little change to the fabric of the market as we’ve known it in 2010.

Mobile Platforms

In Smartphones: Google is King but Apple is Rich

A couple of weeks ago, the inevitable was announced. According to Canalys, a leading mobile market research firm, in Q4 2010 Android has overtaken Symbian as the world’s most-pervasive smartphone platform. According to Canalys, 33.4 Million Android phones were shipped by Google licensees in the quarter – more than double the iPhones or BlackBerries.

While this has been touted with much fanfare, some seemingly contradictory information is “common knowledge” to mobile application developers. It is still much easier to get traction and especially monetize iPhone apps than Android apps. How come? With such momentum for Android, you’d expect it to be at least as successful as iPhone.

The answer, which I’ve been proclaiming for awhile now, can be summed up this way – “Android is the new Symbian”. Now I’m sure some Googlers will resent this, so maybe a different way to put it is – “Android is the new MS-DOS”.

What I mean by this are really two things. First, that Google’s strategy with Android is to reach as far and as wide as it can. That’s one of the reasons it is free to licensees, open-source etc. Google intends to eventually leverage Android by tying it to its other assets and ultimately use advertising to monetize it. This means you can build cheap Android phones and target the mid-market, not just the high-end as other smartphones have (in truth, Android hardware requirements are still relatively high, but Moore’s law is taking care of that cost). Furthermore the abundance of licensees means that a price war is evident – and indeed we now see free (subsidized) Android phones on many operators portfolios. So – Android is becoming the dominant player in the mid-market, with high-end presence too, and ultimately low-cost aspirations. This is exactly the path Symbian took in 2004 – 2008, becoming the world’s leading smartphone platform by volume – but dwindling in consumers’ eyes to a point where it drives low-margin devices, with BlackBerries (initially) and iPhones (later) commanding the high-end, high-margin sector. In 2008, a Nokia executive told me personally that Nokia learned the hard way that the top 10% of the handset market commands 50% of the margin. Think about it – if one company takes over the top 10%, it can be worth as much of all the other companies combined (who sell in aggregate 9 times as much as it does). Right? So this is the second point – a smartphone platform that is focused on mass is doomed to become a low-margin platform. Google doesn’t mind. But it’s licensees are doomed to fighting over scraps.

Now this is a tall order claim, that I couldn’t really publish before, until I ran into this analysis by Asymco’s Horace Dediu:

Which brought to mind Noam Wasserman’s “Founder’s Dilemma” metaphor about Rich vs. King. Apple’s startegy with the iOS devices, just like with the Mac before, is to aim for the top 10-30% of the market. The people who can spend, the people who care deeply about the product they are buying and using. Google’s strategy is more like carpet-bombing. If we can get to 80% of the people, we’ll surely find a way to monetize that.

So is this just an interesting business case? Or Valley gossip?.

If you’re involved in this business in any way – you might be an app developer, a marketer wanting to reach mobile device users through mobile ads or a mobile app / website etc., or a service provider who is pushed to provide a service to his customers through their phones, this is critical info. Cause it means that you are going to reach a different demographic and psychographic when you target the different platform. In the Apple case, your demographic will be skewed towards high-income, users may be more engaged with the product, and there may be more willingness to pay. On the Android platform you will eventually reach more people, but engagement and purchasing intent will be different. And your adoption ratio (compared to the total available Android market) will be different, as many of these users are much less enthusiastic about their phones. Yes – they bought a smartphone, but maybe because “everyone else is getting one” or because “it was free, so why not”. So choose your audience wisely, and plan your marketing moves with consideration for its composition.

Mobile Platforms

Why Amazon Needs An Android App Store – A Different Take

A couple of weeks ago, Amazon’s opened it’s App Store to developers, and promised to actually open the store to consumers “this year”. While TechCrunch’ Jason Kincaid has done some good work explaining the premise to consumers and the overall eco-system, a clear answer to the question “Why” remains open. After all, if this brings about further market fragmentation, if it’s going to be that hard to get the store pre-installed on phones which is the only sure-fire way to generate market traction, and if the direct returns from running an app store are generally not meaningful – i.e. the app store is a means to facilitate activity on your platform and make it competitive, (smartphone, e-reader, whatever), much more than a system to generate revenue from commerce.

So why does Amazon, which does not have a smartphone platform (Kindle aside), and certainly no platform / device stake in Android, need an Android App Store? The only attempt at an answer I’ve seen came from Gizmodo, and left much to be desired.

While it is entirely possible that the simple answer is “it doesn’t” and this is just a mistake carried too far, here is a  more strategic explanation.

An App Store Is About A Billing Relationship With Users

The biggest advantage the iTunes store had on prior online music stores, and the iTunes App Store on various other app download sites, is the immediacy of transactions that is enabled by the requirement to have a credit card registered with iTunes from the get-go, and by the support for $0.99 micro-payments. This made one-click purchasing a reality, and made the iTunes App Store such a hit with people looking for a quick-fix to their boredom, as well as entertainment app developers of all sorts. Competing app stores which did not have that billing relationship with customers never created a similar volume of sales – including the Android Market itself.

In the same token – while initially most of the business executed on the iPhone App Store was through a pay-before-download model, it seems like more and more of the business is now tied to in-app payments, i.e. “download for free and then pay for digital goods” – be they more levels of play, various items to use in-game, premium content etc. . For instance if you look at the iTunes’ App Store’s “Top 10 Grossing” chart today you will find the FREE game “Zombie Farm” – a game that monetizes only through in-app payments, facilitated through the iTunes micro-payment capabilities.

Amazon is all about a billing relationship for retail. It has made simplifying payment and delivery key pillars of its strategy. It keeps your credit and debit cards on file, and even issues its own store cards for many users. For a very high percentage of existing Android users, this means an Android App Store is a store where they could immediately purchase and download apps based on their existing payment cards stored with Amazon. This is a key advantage Amazon likely hopes to put to use.

But even more importantly for Amazon – Android is a smartphone platform that is already penetrating new global markets en-masse, and if Amazon manages to become a de-facto standard app store, then the billing relationships created with new Android users will then be mined to sell other digital goods – and later physical goods. i.e. the “Amadroid” app-store has the potential of recruiting new Amazon customers in massive volumes, internationally. And that’s a major strategic opportunity.

Amazon Has Better E-Commerce Credentials

Most every existing platform app-store has managed to miss some critical aspects of optimal merchandising experiences. Whether it’s the billing relationship question, the discoverability issue (that I wrote about before, e.g. here), the lack of personalization and so forth – it looks like no one, including Google, has built a great commerce experience that entices users to buy more. In Google’s case a cursory examination would show you apps in languages you don’t read, prices localized to sums like “$3.13” which make little marketing sense, an arbitrary or random list of proposed apps. Compare to your average Amazon display – where once you get into the site, shows you products that YOU are likely to be interested in, suggests add-on or replacement products should you not like the ones on display, and tells you what other people are buying. Amazon with an eye for detail and a knack for optimization is well positioned to create a better customer-trap. This is good for customers, good for developers, and good for the platform. Amazon is betting that if they can build a better store, ultimately Google will not fight back. After all, that is not the reason Google built Android, nor is it how they intended to monetize it.

So Amazon has a better shot than Google at building an effective store (for Apps or any other digital content or physical goods), and certainly better than wireless carriers or some of the other contenders. And there are very good reasons to do so – regardless of the size and commercial dynamics of the app market itself.

It’s a Platform, Silly

Taking this a little further – let’s look at in-app payments again. If this model, facilitated by the store, is adopted by apps selling other goods – digital or otherwise, and especially if Amazon can make the commercial terms more flexible based on what is being sold and by whom – this is really a new mobile commerce platform that Amazon can run, and will allow other innovators to use Amazon as an enabler platform.

That is exactly where Amazon wants to be. It’s the philosophy behind Amazon Marketplaces, Amazon Web Services and several other Amazon initiatives. Amazon wants to be the e-commerce platform for the web – including the mobile piece of it. The more end users are reached, the bigger their total market share is going to be. Period. Having a successful mobile app store for Android or any other platform will help them get farther, faster.