Android Developers Pushed Towards Google Wallet Payment

Google has made it clear that Android developers must use its Google Wallet payment service if they hope to develop games and apps for the mobile platform. While the move may seem restrictive and monopolistic to some, many believe that it will help developers in the long run by providing a streamlined method of payment for customers.

Google has used email messages to notify Android developers of its intentions to push a Google Wallet-only strategy.  According to Si Shen, founder and CEO of Papaya, an Android-based social gaming network, Google sent an email last August asking her to comply with the company’s payment restrictions.  Failure to do so would result in having her apps suspended from the former Android Market after 30 days.  “They told people that if they used other payment services they would be breaking the terms of use," said Shen. “Whether it’s right or wrong, we have to follow the rules.”

When Papaya first submitted games to the Android Market two years ago, Google Wallet was not available as a payment option, causing the company to employ PayPal and Zong for billing services.  Papaya has now dropped both services and elected Google Wallet as its sole avenue for in-app billing.  Commenting on Google’s new policy, Shen said: “If we had a choice, the freedom to choose which billing service, then that’s even better. But if we have to follow the rules, we will.  I want to maintain a very good relationship with Google. We are very collaborative. It’s very important to the business.”

One problem developers have with Google Wallet is its cost.  Developers who use the service must pay a 30 percent commission to Google on any revenue gained from app purchases.  Other third-party payment services charge developers a smaller commission, which makes them appealing alternatives.

Still, despite its cost disadvantages, adopting a policy that only allows Google Wallet is a move that was necessary.  Google’s app store, formerly referred to as the Android Market and now called Google Play, has failed to achieve the level of success of its main competitor, the Apple App Store.  One of the main reasons is the openness of the Android platform.  Some have described the Android app purchasing process as a confusing one due to the different payment choices.  By using a single payment system, many believe Google will make its mobile platform more user-friendly for app consumers.

A look at Apple’s success should give hope to Android developers.  Its iOS platform enjoys higher app sales conversion rates mostly because Apple requires its developers to use the company’s proprietary payment system.  Charles Hudson of Bionic Panda Games described the advantages of adopting a single payment option system: “This is one of the things that have helped Apple succeed.  Google sees the benefits that provides for the Apple platform and wants to create a similar system.”  He continued: “Without having to chose your payment option it’s closer to the one-click experience of the Apple iOS platform.  The convenience factor would outweigh customer losses.”

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{mospagebreak title=Smartphone Trends}

Smartphones to Account for 96 Percent of U.S. Handsets by 2016

Market research firm iGR recently released its U.S. Smartphone Forecast report, detailing sales trends and projections for the smartphone, feature phone, and mobile operating system landscapes for 2011 to 2016.  While the rising popularity of smartphones is currently no secret, the firm, which specializes in mobile and wireless industry analysis, estimates that the devices will gain the dominant level of a 96 percent market share in the United States by 2016.

According to iGR, smartphone sales accounted for just 33 percent of all U.S. mobile handset sales in 2009.  That number jumped considerably in a short time, as smartphone sales amounted to 76 percent of the U.S. handset market by the end of 2011.  With such an astronomical rise in popularity, it’s no wonder why iGR projects a 96 percent market share for smartphones by 2016.

A wide variety of factors have contributed to the rather rapid success of smartphones.  Hardware and software for mobile devices have seen significant gains in terms of sophistication and innovation, as have carrier networks with advances such as 3G and 4G technology.  Many consumers have been lured in by the appeal of smartphones and have upgraded from simplicity offered through their basic feature phone predecessors.  Another factor is the seemingly constant need for data to provide entertainment and productivity.  Last, but certainly not least, is the rise of smartphone adoption by enterprises for business purposes.

Although the future is definitely bright for the smartphone market, Iain Gillott, iGR’s president and founder, warns that original equipment manufacturers as well as software developers looking to capitalize on the boom should jump in while it’s hot.  He said: “The growth in the U.S. smartphone market has been very strong in the last few years.  But as the market becomes saturated, smartphone sales growth will slow. For OEMs who are hoping to gain, or regain, market share in the U.S., the time to act is now. By 2014, we believe the majority of the smartphone sales growth will be over.”

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