March 28, 2010 | by Andrew Kameka
AT&T announced its second Android phone, the Dell Aero, last week at CTIA. Just like its first Android phone, AT&T has opted not to let the Aero install apps from outside the Android Market. A few blog authors and readers have suggested that this is a move to appease Apple and protect iPhone exclusivity. I’m not buying that. AT&T’s decision is motivated by the one thing that drives all business ventures – money.
Here’s a dirty little secret that isn’t actually a secret: carriers take a 30 percent cut on all sales of apps in the Android Market. When you shell out $6.99 for SlideScreen, about $2.09 of that goes to AT&T, and the remaining funds go to the app’s developer (LarvaLabs). Those $2.09 payments will eventually add up to big bucks as Android grows, so it’s not in AT&T’s financial interest to let customers obtain apps outside of the system that raises revenues.
“But AT&T is losing money on potential phone sales,” you say. “People are less likely to buy a lockdown device.” Poppycock! Anyone who would buy a Backflip or Aero probably isn’t among the power users of Android who would care or even be aware of this issue. This is something that people will likely discover after they have already purchased the phone and learn about some great new app like Swype that they’re unable to use because AT&T told them they couldn’t. The carrier will still make money because if they can move units with the Backflip or Aero, they build subscriber rolls and raise a generation of users who probably won’t know any better (or care once they do).
I know that Android users often believe there’s some great conspiracy by AT&T to stroke Apple’s ego and maintain the iPhone cash cow. But AT&T would avoid Android all together if that were the case. The carrier wouldn’t spend money to advertise a product and sabotage it with silly tactics that would turn off potential customers.
AT&T’s CEO Ralph De La Vega doesn’t have time to think up new ways to make Steve Jobs happy, but he’s got plenty of time to think up new ways to keep his investors, stockholders, and his bank account happy. That’s why the Aero won’t be able to install apps from outside of the market. That’s also why you probably won’t buy the phone, but you aren’t the average consumer. The average person who walks into AT&T will purchase the Aero or Backflip and leave thinking they’ve got the perfect phone. AT&T will be $200 richer, with more money likely to pour in once those folks hit the Android Market.
Rant and rave all you want about the spirit of openness that Android should represent, but I doubt AT&T will care once the quarterly reports come out and its still the richest carrier.