January 27, 2011, 3:01 PM — To spur Android app purchases and help application developers, Google will introduce a range of new features around its online Android Market, including an in-app payment option and expanded carrier billing.
"We're definitely not happy with the purchases in the Android Market," said Eric Chu, Google's group manager for the Android platform. One big change will be an in-app payment system, which will let end users pay for the app, for various add-ons, and for so-called virtual goods (such as decorations or a more weapon in an online game), conveniently within the app itself, instead of using a separate payment system.
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Google also plans to expand the carrier billing arrangement it introduced in December with AT&T, according to Chu. With this arrangement, subscribers can have Android Market charges placed on their monthly cellular bills.
He described the upcoming changes, mainly in general terms, during a question and answer session before an audience this week at the Inside Mobile Apps conference in San Francisco. A transcript of the exchange, with some paraphrases and editing for length is available online.
Chu was asked "Does Google have in its culture [the orientation] to offer good payments, given that it has always been driven by advertising?"
"My team is 100% focused on the success of the developers," he answered. "Are users downloading apps; are they buying them? You can expect to see more investment into merchandising, payments, discovery, downloading. Those are absolutely top areas for us."
Google had planned to release the in-app system in the prior quarter, ending in December. But "with developers focused on their Christmas apps, we couldn't get enough feedback to be comfortable launching [it then]," Chu said. "So look for it soon."
The carrier billing is "expensive" to implement, Chu said, but it's part of Google's effort to make available a range of payment options for developers and users. "As we add additional forms of payment, developers don't have to do anything," he said.
One goal for some of the changes is to make it easier for Android device users to find, evaluate and buy paid apps in the online marketplace. Chu grouped these new features under the label of "merchandizing." They include:
* Helping users find the apps they want faster and more accurately.
* Creating more lists.
* Exposing more apps.
* Revamping the algorithm used to rank apps.
The in-app payments will open for Android developers a new sales channel, where users pay for objects, products, and commodities that exist only within a game or online community. Some online gaming applications are shifting from traditional subscriber fees to free gameplay, with the sale of virtual goods to the players creating a growing and lucrative revenue source.
A September report from Inside Virtual Goods predicts that revenue for this sector will reach $2.1 billion in 2011, up 40% from $1.6 billion in 2010. In 2009, the total was $1 billion.
In his coverage of that report, VentureBeat's Dean Takahashi noted that "Virtual goods have blossomed on the iPhone as Apple launched its in-app purchases feature for the iPhone last fall [2009]. And virtual goods purchased on connected consoles via Microsoft's Xbox Live online game service and the Sony PlayStation Network are also growing.
John Cox covers wireless networking and mobile computing for Network World.
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