From this article its clear that SharePoint self hosted apps doesn't support Kerberos authentication unless "it is configured to use NTLM as a fallback authentication method"
Could any one be able to configure Kerberose authentication to use NTLM as a fallback authentication for provisioning users to login into apps.
Reference:
At the bottom of this article http://blogs.technet.com/b/sharepoint_-_inside_the_lines/archive/2013/06/23/404-amp-401-errors-with-the-app-management-service.aspx
Well, Eventually got through this by,
configuring IE settings. Go To Internet options and add the apps site to trusted sites and then uncheck the tick box "Enable Integrated Authentication" in Advanced tab.
This will prompt for Username and password for every new session of user, which is a bit annoying though, and then allows user to log in to the SP app.
What happened here is, the SharePoint requires Kerberos authentication initially and it fails to authenticate, so it fallback to NTLM and prompt for credentials and it will be happy then to authenticate the user.
But still I don't like to get user prompted for every new session though
