Microsoft Learns the Wrong Lesson from Apple

By Josh Catone
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In its first month, Apple’s App Store, which sells applications for its iPhone and iPod Touch devices, raked in $30 million, and is on track to do over $300 million in sales by year’s end. Investment firm Piper Jaffray thinks that in 2009, App Store revenues could top $1.2 billion, which would make it a major source of revenue for Apple.

From Microsoft’s perspective, that all must look pretty tantalizing. Their more mature Windows Mobile platform has about 18,000 applications compared to just 2,000 for Apple’s. Unlike Apple, though, Microsoft doesn’t control the distribution of apps on its platform — virtually anyone can set up a marketplace and sell Windows Mobile applications, and many people have. So Microsoft is theoretically missing out on a ton of potential revenue by not being a central clearinghouse for apps on its mobile platform.

For now.

There was news yesterday of Skymarket, which is apparently the name of Microsoft’s planned application marketplace for mobile apps on its forthcoming Windows Mobile 7 platform. According to a Microsoft job posting, the company is aiming for Skymarket to be “‘the place to be’ for developers wishing to distribute and monetize their Windows Mobile applications.” Google announced an app market for their phone operating system, Android, last week.

On the surface, this seems like a good lesson for Microsoft to learn from Apple: controlling the distribution for applications means a ton of potential revenue. But is it bad for consumers?

That really depends on how much like Apple Microsoft wants to be. As we discussed last month, closed platforms are bad for the web. They provide added security for users, and additional revenue streams for platform providers, but they also foster “tension between application developers and platform owners, and [potentially give] users the feeling that they don’t actually own the applications they’re using.”

The Guardian’s Jack Schofield thinks that it is unlikely that Microsoft can afford to be as closed as Apple is with their application platform, because as soon as they try that, existing application sellers will cry foul (and Microsoft has a history of trouble when people start calling them a monopoly). That’s probably true, and Microsoft seems likely to also tie Windows Mobile 7 into its Live Mesh platform (our coverage), which by most accounts is proving that Microsoft knows how to be open.

On the other hand, suggesting that Skymarket is solely a clone of Apple’s app store is disingenuous. Microsoft has plenty of experience with controlled, closed platform application marketplaces. The Xbox Live Marketplace has been available for nearly 3 years (and since 2004 as the Live Arcade). That marketplace is a Microsoft controlled application store (that sells games in this case) similar to Apple’s App Store.

For their part, Google has indicated that their Android marketplace will be wide open. “We chose the term ‘market’ rather than ‘store’ because we feel that developers should have an open and unobstructed environment to make their content available,” said Google Eric Chu to CNET last week. Chu compared the process of uploading apps to the Android market to uploading videos to YouTube, indicating that any control Google will exercise over the marketplace will be passive, after-the-fact-style moderation.

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