Google's Checkout 'Failure' Now a Big Problem for Android

Back when Google first launched its payments platform Checkout (in 2006) it neglected to "sell" the service to consumers. In other words Google didn't do a very good job explaining why consumers should use the system. At the time the notion was that Checkout would succeed or fail on its own merits.

That position was generally taken with most of the Google product launches: people would adopt them or not. There was an aversion toward traditional marketing at the company. (That has changed substantially.) In fact there were actually some very nice aspects to Checkout, but those were not sufficiently exposed to consumers. Google did do some marketing to advertisers online.

There were some online display buys promoting, to AdWords customers, the benefits of putting the Checkout button on their paid-search ads. When Checkout launched there were headlines like "Google launches PayPal killer." But it obviously never lived up to that hype. In fact as PayPal is surging Checkout is lurching. 

Google has tried to drive Checkout adoption in a couple of ways and with other products -- most notably Android. And that's where they're getting bitten on the posterior. Android monetizes at lower levels than Apple and BlackBerry. It's quite a bit worse than Apple in fact. This has created problems and dissatisfaction for many Android developers that are well documented

Most Android users, including me, just don't buy apps. This stands in marked contrast to the culture of paid apps over at Apple or RIM. One of the fundamental reasons for this is the lack of Checkout adoption. If Checkout were widely penetrated among consumers, as iTunes is, there would be less friction in trying to buy apps. 

Other systems are being tried, including carrier billing in some cases. And now Rovio, maker of the wildly popular game Angry Birds, has vowed to develop an in-app carrier-billing payment system that bypasses Checkout. This is reportedly based on frustration over the limitations of Android billing. The company will also let third parties use the system as well. 

I've argued in the past that Google will be forced to buy a payments platform (e.g., Boku). Theoretically it doesn't need to because of Checkout but as a practical matter it needs one with an installed base and momentum in the market. We'll see what happens but the lack of "investment" in Checkout early on has now come back to haunt Android as it tries to rely on the service as a fundamental piece of mobile infrastructure.