Unlike the iPhone, Android devices are open for applications to be installed from any number of sources. Hence, even though there is the "official" Android Market, in principle anyone else can create their own market and compete. And, as I wrote about a couple of months ago, there are certainly people and firms trying to compete.
In practice, that's a wee bit difficult.
Carriers will likely insist upon Android Market being the sole pre-installed market on any devices they agree to resell, since they get will get a cut of the proceeds from in-market sales. Alternative markets, therefore, need to bootstrap themselves via alternative means: for example, coming pre-installed on non-carrier-sponsored devices. This playing field is level in theory and tilted in the direction of Android Market in reality.
To gain "market" share, alternative markets will need to build a better mousetrap. Google is strategically nimble compared to other firms, but at the tactical level they still can be beaten in any area that is not tied too much to Google-powered network effects.
The good news is that there are any number of ways that alternative markets can add features that may help them succeed in one form or fashion, such as:
- Getting social: Do more to help Android owners not only find and use applications, but promote the good ones to their friends, via social network hooks, Web site widgets, "beaming" applications from device to device, etc.
- Expand distribution: Add referral fees to convince others to spread the word about apps, or help arrange distribution through existing major channels like Amazon, eBay, Download.com, etc.
- Alternative revenue: Help app authors make money in ways other than sales of apps, such as a framework for pre-paid support services
- Metrics: Help app authors understand what is and is not working in terms of promoting their applications, via site metrics showing popular inbound Web site links and the like
Better feedback: If the current comment-and-rating system offered by the Android Market is a weak spot, do better, to help app authors learn what needs work and what are the strong points of interest
Best of all, many of these are not strictly competing with Android Market. Implemented properly, they could be used app authors across markets, or in tandem with Android Market itself. This not only helps the app authors, but it helps the alternative market creators, whose most likely "payday" will come not from tiny slices of individual transactions, but rather from being acquired by some other firm, like an OHA member, possibly even Google itself.
After all, if you can't beat 'em, join 'em.