According to data Ad Age collected from research firms App
Annie, Gartner and eMarketer,
Apple makes at least six times as much app revenue per iOS user
than Google does from Android users.
To put it simply, if you want to make money off of apps --
especially among U.S. consumers -- you're far better off building
"For every dollar a developer makes on iOS, they can expect to
make $0.24 on Android for the same title," said Peter Farago,
VP-marketing for mobile-analytics firm Flurry. "Just because there
are more users on Android, doesn't mean [developers] will make
more. They'll make less. … If you and I were making an app
tomorrow, I'd say we should build for iOS first."
Mr. Farago's belief that iOS remains the more lucrative app
marketplace for developers (and brands) seemingly contradicts
research from App Annie, a Beijing-based app research firm that
said Google increased revenue earned from apps sold in Google Play
by 311% from January to October this year, while Apple App Store
revenue grew just 12.9%.
But these numbers only show cumulative sales growth, a metric
which skews in favor of Google Play because of its historically low
As of January this year, Apple had paid $4 billion to app
developers, said Apple spokesman Ted Miller, meaning more than
$5.71 billion in transactions were conducted through the Apple App
Store. In November, Apple announced it had paid $6.5 billion to app
developers, meaning its App Store generated $3.58 billion in
revenue in just the first 10 months of 2012. Put another way, more
than a third of the revenue Apple has received via apps has come in
These gains came in spite of Google widening its gap with Apple
in terms of global market share. The number of worldwide devices
running on iOS or MacOS (including iPhones, iPads and Apple
computers) increased just 61.4%--from 225.7 million devices to
364.3 million -- from 2011 to 2012, according to research firm
Gartner. User growth for Android devices, however, was more than
double Apple's; from 2011 to 2012, the number of Android devices
worldwide jumped from 261.7 million to 608.4 million.
Although Android extended its lead in device market share, the
Apple App Store still accounts for 80% of the dollars spent in the
app economy compared with Google Play's 20%, according to App
Annie's recent report.
Eric Litman, CEO of mobile ad-serving company Medialets, said
that Google's recent increase in app revenue is , in part,
cultural. As apps become an increasingly important part of everyday
life, more smartphone users are comfortable using (and purchasing)
apps. These new app customers are likely Android users who are just
now becoming accustomed to making purchases on their phones. iPhone
users, on the other hand, have been making app purchases for years.
Now, they're just spending more.
Apple has been able to maintain its lead because all of its
devices are integrated with a more frictionless payment system and
it requires all users to sign up for accounts, Mr. Litman
"The Apple ecosystem has had much longer to mature its products
and build a really great, consistent user experience," he said.
"With iTunes, Apple trained 150 million people to put in their
credit-card information and pay for content. They've had a running
start on Google."
Not all active Android devices are payment enabled -- as opposed
to 100% of Apple devices -- so getting those users to monetize via
apps is difficult.
In October, Google began allowing Verizon-based
Android users -- approximately 40% of its user base -- to charge
apps directly to their phone
bill. While this has failed to catch in the U.S., it is
incredibly popular in Asia, Android spokesman Christopher Katsaros
More than a quarter (29%) of Google Play's October app revenue
came from Japan, compared with 26% from the U.S., according to App
Annie. It was the first month U.S. users have not been the top
revenue source for the company.
The U.S. remained the top app-revenue-generating country for
Apple, accounting for 33% iOS app revenue in October. Japan
accounted for 14%. Apple's success at monetizing U.S. users is
significant considering Apple lags behind Google in both smartphone
and tablet market share in the U.S. As of October, 53.6% of U.S.
smartphone owners were Android users, with 34.3% on iOS, according
to ComScore. For tablets, the breakdown was 56.9% to 43.2% in favor
Yes, Google has begun to close the gap on Apple in terms of
total app revenue, but that should be expected considering Google
has the majority of users. Apple still has a more-elegant payment
system and a user base that 's wealthier, more tech-savvy and
consequently willing to spend more on and via apps.
IOS users are 50% more likely than Android users to make between
$200,000 and $250,000 a year, according to mobile ad-targeting
company Jumptap. Additionally, iOS users are 64% more likely to
work in the tech sector and 9% more likely to own a home.
As app monetization goes, the difference between the iOS and
Android user bases is one of quantity vs. value. Apple's relative
market share may be shrinking, but its small number of users is a
far more valuable market segment in mobile commerce. Android has
the numbers, but iOS has the mobile commerce spenders, and they're
spending progressively more.
This dichotomy between user bases has not been lost on media
buyers. Android's share of mobile ad impressions actually decreased
from 53% in 2011 to 37% in 2012, a trend that mobile marketing
solutions provider Velti attributes to the popularity of the iPad
Mini and iPhone 5. The iPhone 5, released last September, has
already caught up to the Samsung Galaxy S3 in
terms of ad impressions, the company said.
Apple has the same allure for app developers and retailers.
Rovio, the maker of the hit Angry Birds game series and arguably
the most-successful app developer in history, makes iOS users pay
for its game while offering freemium versions on Google Play.
Supercell, the gaming company that makes $500,000 per day off its
games Clash of Clans and Hay Day, only offers its games on iOS.
Iconic retail store Macy's offers apps on both platforms, but when
it rolled out a Black Friday enhancement to its app earlier this
year, it only did so for iOS devices.
It's easy to look at Google's gains in the apps economy and say
that it marks the end of Apple's stranglehold on a marketplace that
the company itself invented. But when you're the leader of an
industry, everyone can see a target on your back.