Google rehabs Android Market as Verizon iPhone looms

Jason Ankeny

If you're an Android developer, chances are you're unsatisfied with the monetization opportunities available via Android Market. Google (NASDAQ:GOOG) feels your pain--in fact, the company is as displeased as you are, and vows significant changes are afoot. Speaking last week at the Inside Social Apps conference in San Francisco, Android Developer Ecosystem manager Eric Chu said Google will introduce an in-app payments solution during the current quarter, enabling Android Market shoppers to purchase virtual goods, additional gaming levels and so forth. That's a substantial upgrade: Late last year, mobile software analytics provider Flurry reported in-app transactions now account for about 80 percent of developers' average monthly revenue per user on Apple's (NASDAQ:AAPL) rival iOS platform.

No less significant, Google also plans to roll out additional carrier billing options in partnership with operators across the globe. Android Market quietly introduced direct carrier billing for premium applications sold on the AT&T (NYSE:T) network late last year; Chu said it is both expensive and time-consuming to forge carrier billing agreements, but added Google recognizes the potential impact on consumer app spending. Also on tap: Enhanced application discovery tools. According to Chu, Google is at work on improving Android Market's ranking algorithm in an attempts to make it easier for users to find quality applications. In addition, Google will continue investing in its Android Market support staff, building out a team to enforce the store's terms of service and eliminate apps that violate the rules.

But Google's efforts to strengthen its ties with the developer community extend far beyond revamping Android Market--the company is now looking to bring aboard dozens of developers to build applications for smartphones and other connected devices. Sources tell The Wall Street Journal that Google is actively recruiting software engineers, product managers, user interface experts and others with compelling ideas for mobile apps ranging from games to location-based solutions--in addition, some existing employees are switching jobs to focus their efforts on the mobile platform. Google's recruitment drive (headed by product management director Benjamin Ling) hinges on the same core principle powering the Android platform--i.e., freedom. Sources say Google's pitch promises developers substantial autonomy, bolstered by the benefits of corporate backing (including salaries) as well as distribution muscle, like Android pre-installation deals and Android Market storefront promotion.

It's all part of Google's master plan to gain the upper hand over archrival Apple (NASDAQ:AAPL)--which explains why some of the resulting applications may be limited to Android in an attempt to spur consumer interest in the platform. It's no coincidence that Google is doubling down on mobile at the same moment in time the iPhone is coming to Verizon Wireless (NYSE:VZ), jeopardizing Android's extraordinary growth. The iPhone's arrival likely means Verizon will shift its attention away from the Droid series--on the other hand, with the loss of its iPhone exclusivity, it's equally likely AT&T will focus on Android with newfound dedication. In fact, internal documents acquired by the Phandroid website indicate AT&T will introduce no fewer than 12 Android smartphones in 2011. The battle lines are about to be redrawn--and for Google, that means rewriting the rules of engagement with consumers and developers alike. -Jason