In Feb. 26 IssueBy Jeff Smith, Columnist
There's a big buzz online about some numbers released by IHS, a standards and research organization, referencing the market patterns of smartphone software vendors. The loudest buzzing seems to be surrounding the impressive 861% growth of Google's revenues last year.
2009 2009 2010 2010
Store Revenue Share Revenue Share Growth
Apple App Store $769 92.8% $1,782 82.7% 131.9%
Google Android Market $11 1.3% $102 4.7% 861.5%
Source: IHS Screen Digest February 2011
Developers are concerned about which platform they should be programming for in the future and how their time would best be spent.
The total market share for Android is kinda puny when compared to iOS, the operating system on the iPhone and the iPad. Simply put, it is a much much smaller pond. So an application does not currently have the potential to make as much money on the Android Market as it does in Apple's App Store. If every iPhone owner gave me a dollar, and every Android owner gave me a dollar, I'd be getting way more dollars from the iPhone people.
There's also a lot of conjecture about which software ecosystem is better. Google has lots of free apps, and the rumor mill has it that there's a lot more piracy happening on the Android platform. These two things are very scary to developers.
Much of the revenue brought in by the Android Market is from advertising services, while Apple just manages to get people to pay straight out for applications using a credit card. This sounds much more secure to a developer, but then they have to put up with Apple, who haven't been all that nice to the developer crowd lately, take a larger cut of the profits than Android, and will likely only worsen in the future.
The thing that I think is most important for developers to look at is the efficiency of the company: what they can do with their market share.
If you divide the amount of revenue by the amount of market share the company possessed, then you can see how well they work with what they've got.
Both companies were neck and neck in this regard in 2009, and again in 2010.
iPhone $769m / 92.8% = $8,286,000 per 1% of market share
Android $11m / 1.3% = $8,461,000 per 1% of market share
iPhone $1,782 / 82.7% = $21,547,000 per 1% of market share
Android $102 / 4.7% = $21,702,000 per 1% of market share
So pound for pound, Android is pulling in more revenue than iOS. This includes tablets as well. Another thing to note is that both companies gained a big jump in revenue per market share from the one year to the next. Approximately the same amount. I think this is because they're surfing the same wave. Smartphones have really risen in popularity the last couple years. What is important to note about this is that Apple managed this efficiency by limiting the types of applications allowed to be sold in their market, bullying people, and milking developers, customers, the publishing industry, the music industry, and anyone else they can think of to send a bill to... while Google managed to be slightly more efficient at generating revenue simply by clever usage of advertising.
Despite the piracy. Despite the freeware, I think a round of applause is in order.
What is so important about the growth? It means that people are switching in droves.