Amazon Appstore Challenging Android Market in Paid Apps

Google's Android Market still dwarfs Amazon's Appstore in the number of available applications for Android phones, but Amazon is proving to be efficient in its app sales, said Distimo.

When Amazon (NASDAQ:AMZN) launched its Appstore for Android applications last March, the assumption was that the portal would challenge Google's (NASDAQ:GOOG) Android Market as a welcome alternative for consumers to download free and paid applications for smartphones.

App download data collected last month on U.S. users by Distimo suggests that's correct. While the proportion of paid apps in the Android Market has declined from 38 percent to 32 percent over the last seven months, paid apps have held firm at 65 percent in the Amazon Appstore over the same period.

Distimo also said that the average price of the top 100 paid apps in the Amazon Appstore, which sets app prices, is 40 percent lower than in the Android Market.

That means some discounted top apps are cheaper in the Appstore than the same offerings in the Android Market, giving Amazon an advantage. Also, some 42 of 110 apps available in both stores generated more revenue in the Amazon Appstore than in the Android Market, Distimo found.

The mobile analytics researcher said that while the Android Market may have roughly 400,000 applications to less than 30,0000 in the Amazon Appstore, the number of new applications in the Android Market was only five times the number of new applications in the Amazon Appstore in December and January.

In other words, the Appstore may be curtailing application submission numbers to the Android Market. What's interesting about that data point is the timing. The Appstore's growth coincides with the launch of the Amazon Kindle Fire tablet in mid-November 2011.

The total number of downloads generated by the top 100 apps in the Amazon Appstore increased by a factor of 14 in December 2011, compared with two months earlier.

That number may only grow over time, as RBC Capital's Ross Sander has said app consumption from the Appstore, along with electronic book downloads, is one of the more popular uses of that 7-inch Android tablet.

The data points are limited by a couple of factors.

First, like the Kindle Fire, Amazon's Appstore is only available in the U.S., while the Android Market spans dozens of countries worldwide. For balance's sake, Distimo looked at app data for the Amazon Appstore and the Android Market in the U.S. only.

Moreover, Amazon doesn't yet sell its own Android-branded phone, though it is widely expected to at some point. That new content window could boost downloads to the Appstore over time.

Interestingly, the Appstore also lets users test applications they're interested in on a simulated Android phone. Customers access the application simulation through their computer using a mouse.

The idea is that consumers can decide if they like the application before bothering to download it. This is a clever feature distinction from the Android Market.