Why isn't Amazon selling apps?
Despite providing the world with a new user interface and a radical step forward in small creen functionality, mobile apps are a mess from top to bottom. Different SDKs require developers to learn and stay on top of new, esoteric languages and APIs with steep learning curves, creating a limited pool of talent for hire. It is not yet clear even which platforms let alone which languages are here to stay. Consumers are faced with a dizzying array of mostly poor quality choices, navigating between which can be a nightmare even on a single platform.
Thanks to search, the web has never encountered the same problem in the same way. It is always easy to find what one is looking for, multi-task, or get a link from friends. Products can be compared in multiple browsers or tabs and comparison shopping is a must. Developers write in a single stack of standards-based languages (LAMP+HTML5, CSS3, and Javascript if the Flash blitzkrieg is truly at an end) that evolve with the web. APIs and frameworks are option and can be adopted at will. Most importantly, all of this is true for mobile as well, just few people are using it.
Instead of developing for a single platform, investing in a proprietary, limited codebase, many developers are exploring cross platform deployment using web technologies and frameworks like jQTouch. It can be easy to make high quality apps that go direct to customers, run offline, and don't need to be approved by anyone. Several big problems emerge that no developer alone can come close to solving.
Discovery. Most users are still looking at the official platform App Stores as the single point of access to adding mobile functionality. It would not occur to most customers to search on Google or try to download a website as an application. Flawed as they are, the App Stores offer destination shopping to millions of registered users.
Payment. All those registered users also shared their credit cards when they signed up. That means a painless, often single-click checkout process and the possibility for in-app purchase. Not only have millions of users already entered payment information, but credit card processing is a nightmare that merchants should avoid when possible. Any new solution would require integrated payment processing that took the issue out of developers' hands without requiring new registration from customers.
User accounts. In addition to data, all these existing accounts are a great jumping off point for keeping account data synchronized across devices and servers. Think about how much simpler the web would be if all the sites you use had a single login system that didn't require password tracking or different authorization systems.
Very few existing companies are in a position to offer a single payment, account-centered, discovery-based, cross-platform app store online today. There are a few basic criteria. First, they need to have an existing financial relationship with the majority of users. That means the company needs to already have your credit card number and experience using it. Secondly they would need significant experience with web merchandising. Google and Apple have both produced shiny stores but neither is designed around the breadth of content apps present (Apple is used to selling music and television shows with album art, a very small market compared to apps). This leaves a small set of contenders.
Google clearly isn't the winner. They have a vested interest in their own SDK and platform, an extremely limited financial relationship with consumers (everyone uses Google but few people have handed over their billing info), and at the end of the day they've sold very few Android applications.
Paypal has no experience with merchandising, unless you count eBay. They do have a large number of accounts with linked billing data, but are more of a bank than a store. Their brand has not garnered much trust from consumers over the years either.
Apple, again, has their own set of goals which do not include cross-platform compatibility. Remember they originally wanted web apps as the de facto standard on iPhone, but after being pushed by developers built an SDK and have been selling proprietary apps that don't offend Disney audiences' sensibilities ever since in tremendous numbers.
That leaves Amazon. Amazon has a long history of making virtually every product imaginable available to search, browse, and buy while looking pretty. They also have everyone's credit cards already. They've shown a strong interest in taking on iTunes before with their own direct digital download service for music and videos, and aren't really involved in the mobile device game (Kindle doesn't count--at least for now, we'll talk after it gets a real touch screen). They can provide a service that meets or exceeds the requirements for discoverability, payment, and single auth while opening up development to the hundreds of millions of developers who can write for the web as opposed to the hundreds of thousands who love Java and Objective C. That also means that consumers could buy a new phone, switch carriers or platforms and take all their Amazon apps with them. Huge value added benefit. For what it's worth Amazon has also created a handful of serious apps for mobile themselves and seem to understand what the market it all about. I want to be able to buy all my apps from Amazon, and you should too.
Why haven't they yet?
A few years ago Amazon got serious about solving the shipping problem. Amazon sells nearly every product imaginable for cheaper than you can get them locally. That combination of convenience and cost is what brought so many of us in as customers. Finally the combination of Prime accounts and direct downloads allowed the to circumvent the problem to a certain degree. Not every home is set up to watch videos downloaded directly on their TV, but once they are Amazon can cut UPS out of the model. No more DVDs in the mail. This was likely the single driving force behind the Kindle. Amazon is not a consumer electronics manufacturer, as made evident by the Kindle's design. They just want an avenue to sell books without shipping books. Because of their direct competition with iTunes and now iBooks, Amazon has a tenuous relationship with Apple. They don't want to do anything that might make the Kindle app get pulled form iPhone and iPad or their other services blocked from the store (Google Voice anyone?). They're in a tough spot of having to protect their existing and emerging markets before investigating radical new opportunities. That being said, there are simpler ways to enter the market. Amazon Payments is a great Paypal-alternative used to accept billing info from users on third party merchant sites using their Amazon logins. Even combining that with data and account portability would let developers sell apps directly on their own sites with many of the advantages described above. Still for a completely integrated solution that could redefine the marketplace, they would need to have an Apps Marketplace as part of Amazon.com. Here's hoping.