While the vast majority of mobile devices worldwide run Google’s Android operating system, Apple’s App Store that remains the cash cow.
This is the case even though Google Play downloads surpassed those from iPhones and iPads in the United States for the first time. The numbers give insight how those who seek to profit from mobile applications should develop their strategy.
Show Apple the Money
App Annie’s annual retrospective report found that in 2015, Apple's App Store made 75 percent more revenue than Google Play — up from 70 percent in 2014.
The report detailed that some type of shift is needed for Google to narrow the gap with Apple. Primarily the issue is that those on iOS, on average, tend to spend more on paid apps and in-app purchases. Android represents a wider distribution of phone prices, with more coming from budget devices.
“While Android is making inroads on Apple's US market share, its revenue lags. Google must continue to evolve its strategy to help drive more revenue for its developers. That said, Android market share needs to grow at the high end of the smartphone market to meaningfully drive more revenue share,” the report stated.
The iOS revenue also soared in China, where Google currently doesn’t have a presence with its Play Store (rumors are that will change later this year). Google Play took the lead in the first quarter of 2015 withe number of downloads, but it still has a revenue issue to solve.
San Francisco-based App Annie is a provider of app analytics and app market data.
Google was the winner in what are called emerging markets, such as Brazil, Turkey, India, Indonesia and Mexico. This is good news for Google, as it will push its ecosystem into more areas. The struggle, however, is that low-cost Android phones don’t tend to turn into high volumes of paid app downloads or in-app purchases.
This means the revenue strategy may look different in other countries than it does in the U.S. and western Europe.
“...Innovative monetization models will be required to convert the ever-increasing numbers of users in emerging markets to paying users. Lower purchasing power, limited access to credit cards, and slower mobile networks limit the viability of the freemium model in these regions, so the ideal method of monetization would likely need to focus on the volume of engagement,” the report says.
While a good strategy is always to be cross-platform, this sheds further light as to why the latest and greatest apps often land on the iPhone first before coming to Android.
The iPhone is as much about social status as much an indicator of social status as a mobile device. Google must find ways to break into the higher-end of the market if its own app storefront efforts are to produce more revenue for developers.
Title image by William Iven