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Summary:

Apple’s iOS platform has paid out more than a billion dollars to third-party developers through the iTunes App Store, but such success is yet to be found in Google’s Android Market. Developers tell Bloomberg they still have “high hopes” that Android revenues will come in time.

slingbox-android

Apple’s iOS platform has paid out more than a billion dollars to third-party developers through the iTunes App Store, but Google’s Android Market has yet to experience the same kind of success. Developers of Android apps aren’t throwing in the towel just yet, however; in a recent Bloomberg article, programmers said they have “high hopes” for the future. Why not, given how Android phones are outselling those running either the iOS or BlackBerry platforms in the U.S.?

The sentiment of waiting for Android’s popularity to spawn profits is summed up nicely by Andrew Stein, the director of mobile business development for PopCap, maker of Peggle, Bejeweled and other popular games. He expects revenues from Android apps to catch up to those of the iPhone by the end of next year, as the company will launch titles for iOS and Android simultaneously by the middle of 2011.

“Even though we are not making any money on Android right now, we have pretty high hopes for it,”  Stein told Bloomberg, adding “There’s really no reason why users shouldn’t consume and buy content to the same extent on an Android phone as they are on an iPhone.”

More phones aren’t yet equating to more sales, however. David Zhao, CEO of Zecter, said that 30 percent more iPhone customers of his ZumoDrive product upgrade to a paid version compared to Android users. Perhaps Google has fostered too much of a free mentality with products, which is now carrying over to the Android Market? After years of unpaid services like Gmail, Google Voice and Google Talk, consumers may be conditioned to — and expect — unpaid services or software on a Google-powered phone.

The Bloomberg piece reiterates several of the challenges faced by developers and consumers in Google’s own Android Market that we’ve mentioned earlier. The Market isn’t available in every country where Android phones are sold, which quickly limits the potential user base and sales revenue for a developer. Android tablet devices traditionally don’t have Market access either. Apps can be difficult to find — ironically, since Google is a leader when it comes to searching for information — although in the latest version of Android, the Market experience has slightly improved.

The Android Market experience will be getting better, however. In May, Vic Gundotra showed off upcoming features such as a web-based Market and the ability to send app installations to a handset from the browser. The question is: How much patience do developers have left for Android when mobile apps for iOS are paying larger dividends?

Related GigaOM Pro Content:

  1. Not mentioned (???) all iPhones already have access to their owner’s credit card number via iTunes ( Android doesn’t have that built-in cheat ) so senseless, impulsive purchases are friction free…

    At least until the Buyers Remorse sets in once you read your billing statement.

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    1. Good point, Todd, although Android Market purchases can be made with Google Checkout, which doesn’t seem to have caught on. That’s probably why Google is reportedly looking to PayPal for Market integration as well.

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      1. But that’s just it, Google Checkout is a multi-step process abstracted away from the Market – which is a good thing for us Consumers as it gives us a chance to say to ourselves “Do I really need a tenth fart app?”

        Ultimately, we all know the concept of paying up front for an application, downloading it to a local device is utterly extinct ( Ref. GMail ).

        Only through pure evil has Apple been able to hold on to this user hostile cash cow for this long.

        If it wasn’t for teenagers credit cards being locked to their iPhones, Apple apps would be one one-hundredth of its success. If I’m not paying the bill, sure I’ll download apps all day.

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    2. @Todd, why is paying for Apps a bad thing for consumers? Remember, 70% of that money goes to the developers, who also need to feed their family like everyone else. If developers can make a living developing apps, in the end, the consumers benefit

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  2. Apple has an iTunes “gift” card available at retailers across the nation. Teens do not need a credit card to access iTunes; they can easily turn cash into something useful on iTunes. What does android have to compete?

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  3. I liked your post Kevin and the Bloomberg article as well. However, as I wrote on my site, I think there is a misconception here. Android developers assume they can sell apps for the equivalent price and volume as on iPhone. I don’t believe this will ever be the case. iPhone is focused on the sale and consumption of content. Android is not. Even using Paypal will only mitigate but not fully correct this situation.

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    1. Yup, it’s all about the ecosystem, Brian, as you astutely point out in your post. Apple established it early and made it simple and that strategy has paid off when it comes to the 160m credit cards on file and barrier-free purchase process. I spend literally thousands of dollars on personal technology items and digital content annually — not just from Apple, of course. But I spent it faster at Apple than anywhere else because it’s seamless. Kinda scary when you think about it.

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    2. Everyone I know (non-geeks) have an iTunes account. None have either Google checkout or even PayPal so would agree that it will take a long time (or changes to Android) to catch up. Many just don’t comprehend how “complete” and wide the iDevice ecosystem really is.

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  4. I suspect that many App Store purchases are impulse purchases. It’s easy to buy since your credit card is already set on the iTunes account. It’s not possible to return apps on the App Store and devs surviving because of this on the App Store obviously resent the 24 hour return policy on the Android Market. But it’s great for consumers. It ensures that only quality apps will sell on Android. Admittedly, there are certain apps (mostly games) that are really are meant for entertaining for a few hours and discarded and those games are hurt by the 24 hour return policy. I’m perfectly happy to lose those type of apps in exchange for the return policy.

    The second problem that devs have is the high quality of free apps on Android. I have been unable to find the same kind of quality on free apps in the App Store that I find in the Market. To compete with free, devs have to produce something really worthwhile. Again, great for consumers.

    Android simply sets a higher bar for paid apps. Devs coming from the iPhone are going to have to accept that if they want to develop for the Android. At this point, there are plenty of Android apps and I certainly don’t subscribe to the notion that they are of poorer quality than the ones on the App store. In fact, I think it’s the reverse. While apps on the App Store look better, I find the apps on the Market more compelling and usable.

    There are major problems with the Market and Google needs to address them. But even after discoverability, multi-dimensional lists, worldwide access to paid apps etc. are all fixed, devs are going to still find that they are just going to have to raise their game to develop Android apps.

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  5. [...] Android has been slower to pay dividends to its third-party developer community than Apple’s iOS, in part because of its platform [...]

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  6. “There’s really no reason why users shouldn’t consume and buy content to the same extent on an Android phone as they are on an iPhone.”

    yes there is- Android users aren’t stupid enough to pay for something they can get for free, unlike Apple users.

    Android App Devs will just have to rely on what has driven the web for over a decade- advertising.

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    1. You’re calling a lot of iOS users stupid, they’re downloading 17.6M apps a day – http://tcrn.ch/bNiEYy – More apps than even music.
      iOS devs can make money on both, sales and advertising.

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  7. [...] Market in the past, but perhaps Apple is concerned that rising Android device sales are starting to attract the attention of developers. Regardless of the reasons for more transparency in the App Store process, developers and [...]

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  8. Kevin, I think the evidence points to the fact that Android will not be catching up to the profitability of the iOS platform any time soon (if ever).

    The far larger installed baser of iOS devices (120 million iOS devices vs low tens of millions of Android) and still higher sales of iOS devices worldwide (230,000 iOS devices a day vs 200,000 Android devices) and 160 million app-hungry, credit-card enabled, iTunes account holders means iOS developers have a significantly larger and more lucrative market to sell to.

    Firstly there is the matter of profitability for developers. According to Larva Labs, Android developers have made $21 million which is only 2% of the $1 billion paid out to iOS developers despite the Android Marketplace launching only 3 months after the iPhone App Store. Larva Labs highlights “how much of a cottage industry the paid Android Market remains, with insufficient sales numbers to warrant full-time labor for paid content”

    As Gameloft has said, they sell 400x the number of games on iOS compared to Android.

    Then there is the matter of quality. Because Google does not review or reject any apps from the Android Marketplace, an enormous amount of spam apps, a growing amount of malware and a large amount of “hello world”, buggy, and just plain low quality apps now clog the Android Marketplace.

    John “DVD ” Lech Johansen, the author of DoubleTwist the popular iTunes replacement for Android has this to say about the Marketplace:
    “Google does far too little curation of the Android Market, and it shows. Unlike Apple’s App Store, the Android Market has few high quality apps…. just a few examples of what’s wrong with the Android Market. Those 144 spam ringtone apps (which are clearly infringing copyright) are currently cluttering the top ranks of the Multimedia category… Developers and users are getting fed up and it’s time for Google to clean up the house.”

    Larva Labs point out that “there were roughly 2,250 paid games and 13,000 paid non-game apps in the Market. The reason for the large number of apps vs. games is mainly due to the proliferation of spam apps, something which is much rarer in the games category”.

    In terms of the number of actual downloads by users, iOS App Store downloads now total over 6.5 billion and are growing at a pace of 17.2 million downloads per day. The number 2 App Store – GetJar – only gets 3 miillion downloads per day. It has taken Android almost 2 years to hit a total of 1 billion downloads. iOS does that number every 2 months.

    Then there are the multiple malware apps that have been widely distributed from the Android Marketplace including the nasty wallpaper trojan that was downloaded 4 million times before being outed and the particularly malicious Russian Premium SMS texter trojan not to mention the continuous stream of bank phishing apps and spyware apps plaguing the platform.

    With piracy rates for Android software running between 50% and 97% and Android’s easily circumvented anti-piracy measures, there is far less incentive for developers to commit to developing commercial software for Android.

    The iPad has obliterated all competition in the tablet market with current iPad sales estimated to top 14 million units this year and 36 million in 2011. Many analysts predict that this dominance will continue into 2012 at least and overtake Netbooks in unit sales. With 25,000 apps already custom designed for the iPad in addition to the 250,000 compatible iPhone apps, Apple has an enormous and accelerating advantage over Android.

    In contrast, Google is trying to push developers to use Google Chrome as an OS and web apps instead of native apps for tablet systems by forcing manufacturers to include GSM phone hardware in their tablets if they want the device to have access to the Android Marketplace.

    Then there is the fact that the iPhone and iPad benefit from the iPod’s overwhelming dominance of the media player market (70-80%) and the HiFi integration market (95%) and iTunes dominance of the online music and media market (70-80%) all mean Android has a long hard road ahead of it. With the iPod dock connector and steering wheel integration already either standard or an option in 70% of new cars, you won’t get that sort of integration with an Android device.

    -Mart

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  9. I used to develop apps for Android. I jumped on board with the Dev challenge last year. I have now stopped.

    I’ve had my fun- it was a fun little hobby, but as income it is not worth it. I could have made more money working at the local fast food places for the same number of hours I’ve put in to not only programming, but advertising, answering emails, etc.

    Android users DON’T WANT TO PAY for apps. These people are Google users, Google has always given them what they want for FREE. I’ve tried the following strategies: Paid app, paid app with free lesser version, and free full-featured version with ads. All strategies failed from an income-time efficiency standpoint. The most income-to-time efficient was the paid app only. Like I said, it was fun as a hobby, but I’ve moved on.

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  10. [...] growth of Android may be good for developers looking for a profitable future and customers who want a compelling choice in smartphones (and tablets), and Verizon is happy to [...]

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