Google to Let Android Apps Work the Cash Register

Google will reportedly allow in-app payment abilities in Android applications sometime this quarter.

Android Developer Ecosystem Manager Eric Chu announced this at the Inside Social Apps conference in San Francisco Tuesday, according to reports.

In-app payments will let Android app users purchase virtual goods and enable developers to upsell app users.

Google will also roll out direct carrier billing options worldwide, Chu reportedly said.

Helping Android Appdevs

“Ultimately, in-app payments will provide better monetization methods to Android developers so that more apps will be developed on Android,” Hill Ferguson, a vice president at Zong, told LinuxInsider.

Zong is one of the companies offering direct to carrier billing for Android apps, meaning charges for Android apps purchased show up on their mobile phone bill. Zong offers billing for Android apps on AT&T’s network in the United States, and partners with other carriers abroad.

“Developers want to make money with their apps but they also want to engage people for more time than traditional apps did because that would let them have advertising on the app, and players might buy new characters or equipment or the next chapter of the online game while they’re in the app,” suggested Chris Hazelton, a research director at the 451 Group.

Enabling in-app payments will increase developers’ revenue, Hazelton told LinuxInsider.

“Theoretically, in-app purchases will open the floodgates for the Android Market to support proven business models that are doing very well in the iTunes App Store,” Peter Farago, vice president of marketing at Flurry, told LinuxInsider.

In-app advertising and in-app payments are replacing the paid-for upfront model that apps such as “Angry Birds” use, said Mark Beccue, a senior analyst at ABI Research.

One in-app payment model is the marketing of virtual goods, wherein consumers play a social game such as “Farmville” and buy virtual goods such as seed corn in-app, Beccue told LinuxInsider. Another is the “freemium” model wherein developers put out a free app and consumers have to pay for additional services or enhanced options.

“The freemium model’s growing rapidly because most consumers want to try things out before they buy them,” Beccue remarked.

What’s In It for Google?

The mobile app market is huge, and Gartner Wednesday released new figures that show just how large it is.

Worldwide mobile app store downloads will hit 17.7 billion this year, 117 percent up from the roughly 8.2 billion registered in 2010, according to Gartner. By the end of 2014, Gartner predicts that more than 185 billion applications will have been downloaded from mobile app stores.

Free downloads will account for 81 percent of total mobile app store downloads this year. This percentage has been falling steadily and will continue to slide this year, Gartner said. However, people will download even more free apps from 2012 through 2014, Gartner stated.

Worldwide mobile app store revenue will exceed $15 billion this year, both from end users buying apps and from in-app ad revenues, Gartner predicted. This will be 190 percent up from the 2010 revenue figure of $5.2 billion.

However, getting more revenue may not be the primary driver pushing Google to introduce in-app payments.

“Google wants Android to spread so they can get search,” Beccue said. “If smartphone consumers are primarily driven by apps, then Google needs to make sure that apps on Android work as well as possible because we know they work well on the iPhone.” In-app payment capability is part of ensuring apps work well.

Google did not respond to requests for comment by press time.

Eating Apple’s Dust

Google is late to the game with in-app payment capabilities, something iPhone apps have had for years.

In fact, Google’s Chu reportedly mentioned that the search giant planned to launch an in-app payment system for Android last quarter but was delayed because developers were busy with their holiday-season applications.

“Google’s typically about eyeballs, not about monetizing content,” Maribel Lopez, principal analyst at Lopez Research, told LinuxInsider. “Looking at in-app payment isn’t the first thing you do when you don’t think about monetizing content all that much.”

Getting Closer With Carriers

Chu also stated that Google will work with carriers around the world to offer direct to carrier billings to Android app users.

Last year, it introduced direct carrier billing for premium apps purchased by AT&T network customers.

Zong, and Boku, two of the major players in the social gaming industry, began offering Android users in-app purchase capabilities last June.

“Developers who have incorporated Zong’s in-app solution have had great success,” Zong’s Ferguson stated. “In-app billing is a key component to monetization because it enables developers to offer apps that can be downloaded free.”

1 Comment

  • I certainly hope that direct carrier billing will require opting-in. Currently, one can give a child a phone, knowing that so long as no billing method has been set up in Google Checkout and they stay within the mobile plans text/talk/data limits, all is well. I really don’t want to effectively hand over my wallet to a teenager, who may not realize that they are actually purchasing in-game items with real money.

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