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Apple’s App Store is the App Revenue Leader earning 3.5 times its closest competitor, Google Play

January 30, 2013

iOS App Store has record monthly App sales revenue gain in December, while Google Play (Android) revenue doubles quarter-over-quarter; Placing this in perspective, Apple’s App Store is the App Revenue Leader earning 3.5 times its closest competitor, Google (Android) Play.

Its the Software Stupid…” you may recall in my previous writings.

Smart-Phones, these powerful, portable, hand-held computing, communications devices, are effective tools because of the SOFTWARE, the APPS, that they function with.

Accordingly, to determine how Apple and Android are succeeding, watch the money, not only the device sales dollars… In the world of Smart-Phones, watch their APP sales along side the DEVICE sales. The correlation of these statistics is complex, as the APP sales are generally view as a “trailing indicator;” Meaning that if 1,000,000 Smart-Phones are sold, the corresponding APP sales would have to occur after the sale of the device.

However, there are other statistical deductions that may be made with APP sales. As these devices are purchased and the Device learning curve matures over a period of time, APP sales should grow; and as APP sales grow, the Device becomes more effective tools for these users, and this stimulates more APP sales, as the users discover the incredible capabilities of devices such as the iPhone, the world leader in APP sales.

As mature smart-phone users become more familiar with their device and with more APPs, product loyalty develops, personal recommendations occur, and these users become “intellectually invested” with a growing comprehensive knowledge of their smart-phone, and “financially invested” with their ownership of a growing inventory of APPs…

This phenomena is likely why APPLE enjoys an extremely high product retention percentage. A whopping 89% of iPhone owners plan to stay loyal to Apple with their next smartphone purchase according to a recent survey conducted by investment bank UBS. (See graphic below).

Conversely, since there is a relatively unsophisticated Software (Operating system and APPs) architecture with Android smart-phones, where users are uncomfortable, sometimes fearful in upgrading to Android’s level 4.2 operating system. With over 90% of Android users remain at Level 2 system software Android product loyalty is a totally different story. Android continues to loose 33% of current users to the iPhone every time a new iPhone version is released, as well as 38% of Blackberry users are switching to iPhone. (Observations from a recent Piper Jaffray’s survey by analyst Gene Munster).

Looking further at the graphics below, In the final quarter of 2012, both the iOS App Store and Google Play had strong increases in app revenue over the previous quarter. From Q3 to Q4, Google Play app revenue doubled, while iOS App Store revenue grew by about one-fifth. Even though Google Play had a higher growth rate, the iOS App Store gained more in absolute revenue, given its larger revenue base. The iOS App Store gain also was driven in large part by a record December. Closing out the year, Apple remained the leader in app revenue, earning over three-and-a-half times that of Google Play in December 2012.

Bloomberg noted that App Annie doesn’t provide exact figures for revenue, as it currently sells that data, but the report did provide a break down of revenue by country and publisher. Apple has previously said the App Store was bringing in around $333 million per month between June and December.

Who is App Annie: App Annie, we believes there has been a radical shift in the way content is being distributed. In times gone by, print, radio, television, retail and the web have dominated as content distribution channels. Now however, the distribution of digital content is moving from the open web to digital superstores. Market data is less readily available for digital superstores than the web. App Annie’s mission is to help businesses do “The Math Behind the App Stores”. Its products enable you to make educated business decisions about the app store ecosystem. App Annie’s best-in-class technology infrastructure, analytics platforms, advanced statistical models and a world-class team of data engineers make this all possible. Since it started in 2009, their Analytics product has tracked more than 11 billion downloads and US$1.5 billion of app store revenue across iOS and Google Play, making App Annie one of the largest companies globally in terms of app store market data tracked.

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