Both Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOG) offer tablet systems based on Google's Android. But their app stores are run very differently. And this may be important from an investment standpoint.
Amazon tightly controls its app store. It's seeking the kind of control Apple enjoys. It wants to be the only place you go to with your Kindle Fire tablet if you're seeking any kind of digital goods – software, video, audio, games or books.
This not only lets it profit handsomely from its tablets, but makes them more secure.
Rik Ferguson at Trend Micro (right, from Trend Micro), running in the blog CounterMeasures, makes the point. It's not the Android operating system itself that's insecure, it's the “ecosystem” model Google has pushed for it, the idea that anyone can run an app store.
The Fact is that people writing apps can lie.They can say they are not going to follow you around or misuse your data, then do that. They can stay they're not going to steal your identity, then do that. This is what helps makes Windows so insecure. Anyone can offer software for it, even crooks.
Who polices the apps? In the mobile ecosystem the app store is supposed to. But if you're not controlling who runs an app store, you can have a pirate store. You could have one that steals the trade dress of a legitimate merchant and then sells malware inside “Angry Birds.” Or you can have one whose main goal is just to get your credit card number for purposes of identity fraud.
When one company offers access to the app market, they can police that app market. When there is no central control, malware can strike.
So to security people the answer is clear. An ecosystem needs some point of central control, some virtual TSA officer standing between the merchants wanting to offer apps and customers wanting to buy them. Otherwise any operating system becomes insecure.
This could easily come and bite Google where it counts, leaving Amazon as the leading distributor of Android merchandise, and the biggest gainer in the mobile space for 2012.
Disclosure: I am long GOOG.
Additional disclosure: I tried to explain the security issue in terms of revenues, profits and investment opportunity.