On AT&T's two Android phones -- the Motorola Backflip and HTC Aria -- this feature is absent, thus preventing users from installing non-Market apps. By blocking what Android refers to as "untrusted" apps, it reduces the flexibility of the platform.
Why is this? AT&T is, as far as I know, the only U.S. carrier to block off-market applications from Android devices. Sprint, T-Mobile and Verizon Wireless all allow their Android devices to install off-market apps. I really have to wonder if this is because of some contractual obligation AT&T has with Apple and the iPhone, or if it's simply because AT&T is mean-spirited.
Well, it turns out neither is the case, if you believe what AT&T has to say about the issue. It recently stated, "The Android Market, managed by Google, is open to all developers. There is no approval process for applications, they are all accepted by default and Google has stated that they place apps in the Android Market within 24 hours of their submission. AT&T selected Android Market as the exclusive source for applications because it forces developers to be accountable for the apps they submit. If the Android community has issues with an app, the app can be flagged and removed. This minimizes the risk of malicious apps harming customers and provides more protection to the customer’s private data stored on the phone."
The short answer, then, is that AT&T is protecting its customers. I can understand this viewpoint. After all, who will Aria and Backflip customers complain to if an application bricks their device? AT&T. But I still don't agree with it.
Will most users even know about off-Market apps? Probably not. Plenty of advanced users, however, will be miffed that they can't install beta or pre-release applications. It feels like a close-minded approach, if you ask me, and AT&T is making the assumption that things will go bad if users have access to non-approved applications. The whole decision feels very "Apple like." It's a shame, really.