To date, Android phone owners have only been able to download apps directly on their devices and pay for them through Google checkout or, in some cases, carrier billing. The new online store will download apps directly to the phone, no syncing required. (See Carrier Billing Coming to Android.)
The online version also gives developers the option to include YouTube Inc. videos to promote their apps, as well as high-resolution banners and icons to aid discoverability.
Google has been working with several developers to integrate in-app purchases. One example is Disney Mobile, which -- like many -- has been waiting for in-app billing to bring a popular app (the game Tap Tap Revenge, in this case) to Android.
Why this matters
Establishing an online store will definitely up Google's credibility with both developers and consumers. Android Market has been nowhere near as successful as Apple Inc. (Nasdaq: AAPL)'s App Store when it comes to monetization, in large part because Google lacked a Web store like iTunes and a seamless way to pay. Google has been adding support for carrier billing, but that has proven to be only an incremental step. (See Angry Birds Like Carrier Billing and Apple Breaks 10B Apps Threshold.)
Going online does cut out Google's wireless operator partners, since the transaction is completed via a credit card, but it will likely encourage consumers to buy more data-driving apps in general.
No market or billing mechanism has been able to match Apple's success with iTunes yet. Check out these stories for more on billing in app stores.
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— Sarah Reedy, Senior Reporter, Light Reading Mobile