MoneyWatch Tech

Amazon Outsmarts Apple App Store [Updated]

By Erik Sherman

Updated on: May 11, 2009 / 1:52 PM EDT / MoneyWatch

One of the big levers, both in profit and power, which Apple has had with the iPhone has been the ability to control the sale of apps. Companies that didn't toe the line could always be cut-off, and Apple would get a cut of app sales. But this morning, Amazon announced something that has effectively illustrates a way to walk around Apple and begin encourage more direct sales relationships with customers.

Amazon has launched a Kindle store intended for iPhone users who have the tailored e-book reader software on their handsets:

Now when users of the Kindle for iPhone app click on "Get Books," the new Kindle Store tailored for the size and shape of the iPhone and iPod touch screens automatically opens in Safari. This optimized Kindle store offers iPhone and iPod touch app users quick and easy access to the Kindle Store's 280,000 books, including 106 of 112 New York Times Best Sellers and most New Releases that are available for $9.99 or less.

There are some slick concepts here, like making a book available on the iPhone, iPod, and Kindle simultaneously, keeping the bookmarks synched across all three devices so readers can always find where they left off, and having a version that is "free" on the front end, rather than the hundreds necessary to purchase a Kindle, potentially heading off a rush of authors decided to avoid Amazon.

But the real advantage is not keeping Amazon in the money flow, but moving Apple out of it. Notice the two-step process: get an app onto the iPhone, and then have content or information or something else that people will want to buy. In the case of Amazon, the additional money comes from buying books or subscriptions. But there is no reason why that concept couldn't expand to other implementations. It may be that some app vendors have found this twist, but Amazon represents a hefty example.

[Update: There's still a question of whether Amazon is sharing any of the revenue with Apple. I contacted the media people there who replied, "We don't disclose information regarding terms with partners and vendors." So, maybe yes, maybe no. My guess is that what gets spent with Amazon stays with Amazon, minus the percentage that the comapny has to pay to book publishers.]

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