Amazon has targeted the mobile application space with the creation of it’s own Amazon Marketplace, has locked in some exclusive deals with android application developers to move profits out of Google and into Amazon, and it now might be creating it’s own tablet device that will squarely point users directly back to Amazon.

Amazon is clearly signaling it’s intentions that might as well be considered a nuclear first strike, so how will Google respond?

To win a fight you have to first admit you are in one

Google has a limited opportunity to successfully apply some high impact tactics to take control of the fight. They could for instance court the developers by dropping  the market fees dramatically, creating a better QA filter on the Market, do a much better and more transparent job of promotion for top quality applications etc. in other words address all of the concerns that developers have.

They could make the Google Android Marketplace the most lucrative place for developers to deploy to, making those developers that made exclusive deals with Amazon wish they had never signed on the dotted line. That would be a painful experience for Google perhaps but I suspect not as painful as a later stage fight.

If on the other hand Google dismisses the threat and simply sits back and watches then all things being equal developers will deploy to any and all market platforms without prejudice, and that means Amazon will probably win or at least tie which is about the same.  You might think that Google would be highly tuned into this but there are hundreds of cases where the giant sits back and yawns while Jack raids the place.

So while it seems unlikely there are precedents for Amazon to win vs. the owner of the platform.

Hearts and Minds

Amazon has something that the Android  Market doesn’t.  Namely a few hundred million users that love it’s single point of contact, trusted,  high quality brand.  Amazons users (just not the kindle owners ) can be cross promoted and more importantly these people are used to paying for things vs. just getting them for free.

Savvy developers will quickly figure out which market pays more and try and move their user base to that market. Developers care about market penetration or profits dependent on their own strategy’s. Which means that they prioritize by a few simple metrics

1. Total Customers  Which market Sells / Downloads much of my Apps
2. The Math               Which market has the better profit sharing deal
3. Air Time                  Are my applications getting a fair shot in front of users

While consumers make the final decisions both of these companies should take a page from Microsoft’s success and realize that Developers and Customers are in a symbiotic relationship, without one the other is useless. You have to keep both sides of the pipe happy to make that lucrative brokerage grow.

If I had to guess I would say that Google will be slow to respond because they won’t take this as seriously as they should, which will give Amazon some time to make this all happen. Once Google finally realizes it’s in a real fight they will start swinging wildly and Amazon will be ready and take things up a notch.  Apple of course will sit back and reap the rewards if that happens.

Market Wars, Map Wars, Device Wars, Social Wars, it almost feels like 1995 again …

In Part 3 I will give an overview of the new Android Marketplace initiative that addresses a few of the key shortcomings of the current market that was presented at Google IO 2011