Although in the Chinese mobile app developer report we quoted two days ago, it reads, instead of talking to network operators, Chinese developers are more willing to use the third-party App Stores as the first choice of their applications distribution channels. It sounds reasonable as there are a few third-parties app stores in local Android market which supposedly should give the developers more channels to make money.

But unfortunately, I have heard more and more negative comments on local Android app stores recently. The rumor is that some of them are running out of money. So how come?

Are Free Apps the Killers?

In theory, as all the app stores operators will tell you, they will take 30% of the pay sharing following the same model as Apple’s App store. But in fact, if you check all the app stores, most of apps listed there are free of charge. I guess they could discuss with app developers to push some paid apps, but given the fact that Chinese Internet has NOT the culture of paying for service, there would not be any significant income from the paid apps; on the other hand, if you offer too many paid apps, you might easily lose your user base, as they may find some other app stores which can offer similar apps for free. User acquisition is the top target as you need be standing out of the multi-app-store market by number of users, which, well, also means you need be burning money.

Working with Partners?

As we all betting on Android, so potentially there are plenty of hardware manufacturers the app stores can work with. Android phone manufacturers of course, Android tablets, and even Android TV makers, you can find them all in China. They are looking for good Android-based apps, so for app stores, they can wholesale a bunch of apps for some price. It sounds exciting, but sadly it may not work like that. Here is a true story, a big company has a new Android-based tablet, the product is ready and they are looking for good apps to pre-install on it. They talked to several local app stores but in the end, surprise for me, they choose probably the weakest one to partner with. Why? They told me the offer got from that app store: 500 apps, for free; and the app store will also do the QA on the tablet for those 500 apps, for free. “We are surprised too, but as they offered because they are expecting users and good reputation, so for us why not take it. Not big difference with those apps in different app stores anyway”, I was told.

We know Android is the future, we know Android will be taking over the market. But how long it will be? One year, or two or more? Some of the local app stores they are just like startups with some angel investment or small VC funding, how can we expect they can survive for that long with little income? I would not say they would be dying as they might find some other ways to make money, such as doing some app development projects, but they will be, Falling, as App Stores…