Will iTunes and Android Market go the way of the carrier portal?

LAS VEGAS – Covering Mobile Connections this week it was easy to get the impression that platform app stores like the iTunes and Android Market have reached the end of their usefulness. It’s probably way to early to say, but we may be witnessing the beginning of a trend in which first developers and then consumers start abandoning the big platform marketplaces for independent application portals or the self-discoverability of the Web just as developers and consumers abandoned the operator’s content portals for Apple (NASDAQ:AAPL) and Google’s (NASDAQ:GOOG) app stores so many years ago.

When the iTunes App Store launched it was hailed as a revolution, providing a rich and integrated distribution and discovery platform to accompany the iOS development platform. Sales and downloads are still booming in both marketplaces, but a growing number of developers and consumers appear to fleeing from the officially sanctioned app stores to independent app distributors like GetJar, Appia and Amazon, which can offer billing models, technical features and even marketing and discoverability opportunities the platform stores can’t, or won’t offer.

GetJar has a run rate of 100 million downloads a month, which probably puts it in contention with Android Market for the No. 2 app store slot (Google doesn’t release Market download numbers). GetJar CEO Ilja Laurs originally tried to create an operator-centric model, offering up the GetJar app store as a way for carriers to compete against the big platforms. But GetJar discovered that the direct-to-consumer proposition was much more powerful, generating only 10% of its downloads from operators (CP: GetJar: Operators have lost the consumer). GetJar didn’t need a big mobile brand—whether Google or Vodafone—backing it up to attract developers and sell apps, and now it’s almost abandoned that side of its business entirely. (Laurs will deliver Wednesday’s keynote at Mobile Connections.)

Even the most policed platform, Apple’s is starting to see defections. Cydia founder Jay Freeman estimates that 10% of all iPhones globally are now jailbroken, allowing consumers to escaped the confines of the iTunes App Store and download unsanctioned modifications and apps from stores like Cydia’s. Cydia has experienced success despite Apple’s direct and indirect attempts to shut it down. Jailbreaking is illegal in some countries, and Apple is constantly wiping iPhones of their mods through OS updates. At his keynote today, Freeman said even while Apple is constantly re-jailing phones, users steadily return to the Cydia after getting new jailbreaks (MobileDevPro: iPhone jailbreak king points to the limitations of the platform app stores)
Of course, those frequenting the independent app stores (particularly Cydia’s) tend to be the more tech savvy, while mass market users tend to stick with the big platform stores. But it’s important to remember it was those tech-savvy early adopters that led the mass market to the smartphone in the first place and the official app stores along with it. They may just lead the mass market away from them.

Of course, the platform providers won’t take this lying down. Apple is doing its best to crush alternatives, though Google is probably much more indifferent to where Android apps come from. The result, though, may be that the platform providers become more closed. That never works—just look at the operators. Closing ranks would stifle innovation further and likely only increase the flow of users and developers away from the platform vendors.
We already may be seeing early evidence of this with Research in Motion (NASDAQ:RIMM). While RIM is greatly expanding development opportunities for its new PlayBook (officially launched today) and the BlackBerry Tablet OS, supporting Android Java apps, HTML5 Web apps and Adobe AIR as well as the PlayBook’s native QNX environment, it’s also clamping down on independent app distribution, limiting all app downloads to BlackBerry App World.

Of course, if we are to witness a great exodus from the platform app stores, it will take some time. And because of the explosion in new smartphone sales and penetration, we’re going to see official app store downloads grow incredibly before they start shrinking. But if the platform vendors don’t watch their step, they could set off that developer and consumer flight sooner. The operators micro-managed their content portals to the point of irrelevance; the OS vendors can do it, too.

Think it can’t happen? Think that the iTunes and Android Market are two deeply integrated into the device—that App Store or Android Market is just too prominent to be ignored. Let me ask you the: How many of your smartphones came with a pre-installed operator store app or operator portal home page? When was the last time you clicked one of those portal links or pressed that store icon? Exactly.