App Annie, the app analytics firm, recently released its analysis of the app market in the first quarter. Two statistics in the report have received a lot of press: Last quarter, people downloaded about 70 percent more apps from Google Play than they did from the App Store, yet people spent about 70 percent more money in the App Store than they did in Google Play.
That sounds contradictory, but it’s not, and the downloads-revenue fork illustrates the dichotomy in the iOS and Android user bases.
Consider this, from Ben Thompson’s piece It’s Not 1999:
If you’ll forgive a brief diversion, a pet peeve of mine is when people analyze the mobile phone market, particularly iOS versus Android, through the lens of Apple versus Microsoft in the 80s and 90s. The issue is not the obvious differences — this time Apple was first, the absolute numbers are much larger, etc. — but rather the fact that many of these commentators simply have their facts wrong. Windows didn’t win because it was open or all the other nonsense that is ballyhooed about; it won because MS-DOS was the operating system for IBM PCs, and at a time when personal computers were sweeping corporate America, “no one got fired for buying IBM.” By the time the Mac arrived in 1984, the battle was already over: businesses, the primary buyers, were already invested in MS-DOS (and, over time, Windows), and not many consumers were buying PCs. Today, of course, the situation is the exact opposite: consumers vastly outnumber business buyers. Thus, the chief reason iPhone/Android is not Windows/Mac is because the market is fundamentally different.
In 1984, businesses were the primary customers, and Windows was the default choice. In iPhone/Android, consumers are the primary customers, and iPhone is the default choice.
Because it’s the default choice, most people who can afford an iPhone, and who are given the option to purchase one, will. If you buy an Android phone, it’s probably for one of the following reasons:
- You prefer Android to iOS because Android is “open”.
- You’re rich enough to buy an iPhone, but you don’t care enough about technology or status (or both) to spend a premium on one.
- You’re too poor to buy an iPhone.
The first reason represents a very small fraction of the market. Most people don’t know the difference between “open” and “closed”, and most people certainly don’t care.
The last two reasons, then, are the most common reasons why people buy Android phones. And if you have the money to buy an iPhone but don’t, or if you’re simply too poor to buy an iPhone, you’re probably not going to spend a lot of money on apps.
So when App Annie says App Store revenue was about 70 percent higher than Google Play revenue last quarter even though Google Play had about 70 percent more downloads, people shouldn’t be surprised: Apple’s customers are the ones able and willing to spend the most money on apps, so they do.