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In case you didn’t already know, Apple’s App Store and Google Play dominate the app market.  But the latest report tracking these statistics from Canalys shows that while Google’s app store gets more downloads, Apple makes more money, a lot more.

Google Play saw the greatest number of downloads, about 51 percent, with Apple close behind.   That shouldn’t be too much of a surprise considering three out of four smartphones shipped run on the Android platform.  The interesting part was that Apple’s App store accounted for the largest share of revenue, 74 percent, among the four stores that Canalys tracked.

So how is Apple doing it?

Apple is proving that it is better than Google Play at providing developers ways to monetize apps including in-app purchases, subscriptions and advertising.   But with that advantage, comes a cost.  You have to play by Apple’s arguably monopolistic rules.

“The fact that Apple dominates the market in terms of revenue makes life simple: if you want to make money, the Apple App Store is the (first) place to be,” said Adam Daum, Canalys Chief Analyst, Analytics.  “However, on the negative side, you have to comply with Apple’s policies on app submission, revenue-share, etc, whether you like them or not – because the alternatives are so limited. Also, there is a danger that your apps will get lost among the other 700,000+ apps, it’s almost impossible to get featured, the discovery tools (top lists, search) may never bring you to people’s attention, and so on.”

In-app purchases generated a record 76 percent of all revenue in the Apple App Store on the iPhone in the U.S. in February 2013, according to a report by Distimo, which tracks over 2.6 billion downloads per quarter for major app developers worldwide. That figured jumped from just 53 percent in January 2012, which shows that more developers are realizing the benefits of using in-app purchases to boost revenue.

Windows Phone Store and Blackberry World continue to add apps to their storefronts, but Daum said that Apple and Google still dominate, creating challenges for app publishers, carriers and investors and device vendors.  He believes that those frustrations over the Apple-Google duopoly could mean the emergence of a third ecosystem.

“It would make their lives more complicated in having to range three platform portfolios; but it would increase their bargaining power when dealing with the device vendors, which in turn would improve their margins and profitability,” Daum said.


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