Android-iOS monetization gap: Should it trouble developers?

Android Army

Android significantly outnumbers Apple’s iOS and other mobile platforms in terms of user base. Around the world, there are more than 1.5 million Android devices activated per day. In China alone, there are 270 million Android devices active, and there are almost 1 billion devices activated globally. By contrast, Apple says it has sold about 600 million iOS devices to date.

Sales and activation figures aside, there is one glaring figure that might be concerning for anyone in the application development business. According to recent figures from analytics firms Flurry and App Annie, a big gap exists in terms of developer revenue-per-download from iOS apps compared with Android apps. For every dollar that a developer earns from iOS apps, only $0.19 is earned from Android apps.

Looking further into the figures, a gap likewise exists for both paid downloads and in-app purchases, although it is not as big. For every dollar spent on premium iOS applications, plus in-app purchases, only $0.43 is spent on Android. Taking into consideration in-app purchases alone, for every dollar spent by users on iOS, only $0.24 is spent on Android.

Android iOS monetization gap

This highlights, once more, the so-called Android engagement paradox. While Android devices are more numerous and accessible, there is a stark difference in the behavior and spending patterns of Android users compared to their iOS counterparts. Android users tend to spend less on app purchases and in-app spending. This translates in lower potential revenues for developers, taking into account each user on the platform.

The question, therefore, is this: should developers be concerned? Should this mean that developers should focus building on iOS first, and then worry about an Android port later on? We have asked before: does it make sense for software makers to take an Android-first approach in development?

A numbers game

It can be a concern if the main aim for building and releasing an application would be for revenue-generation purposes. Because the Google Play Store has a wider reach, developers have a potentially bigger audience from this particular ecosystem. This includes a wide spectrum of potential users, from the low-end to the high-end. Meanwhile, Apple is trying for some market differentiation, by orienting its latest iPhone 5C toward a more entry-level audience. However, the market is still markedly mid-range to high end. By contrast, even flagship Android devices are accessible, with Google’s Nexus 5, for instance, retailing for $349 off-contract. Add in the sub-$100 Android devices to the mix, and you’ll have an idea of what kind of potential reach apps can have.

Studies have determined that iOS users are likely to use their devices more often, and are more willing to pay for content, be it in the form of apps, in-app purchases, subscriptions or premium web content. To illustrate, the returns from ads directed at iOS users are a glaring 1,800 percent higher than the same ads directed toward Android users.

Additionally, even eyeballs from iOS devices cost more. “Audiences cost more on iPhone,” said a senior vice president for research firm Nanigans. As a result, developers, content builders and even advertisers are willing to spend more resources toward reaching an audience of iOS users.

But let’s take the bigger picture into consideration. While average revenue might be significantly higher on iOS, it might not matter much in the near future, as the so-called “cheap and nasty” approach to mobile computing taken by Android is still a significant threat to iOS. The revenue gap between the App Store and Google Play is closing fast. In Q3 2012, iOS app revenue as a whole was 4 times bigger than Android app revenue. In Q3 2013, this gap was only 2.3 times.

As a result, app development firms — particularly those in Asia like Japan and South Korea — are shifting to an Android-first development strategy.

We can add in third party platforms into the mix. Recently-launched Jolla supports Android apps. Other platforms likewise supporting Android apps would be a big boost to the Android ecosystem. Suddenly, these apps are becoming a platform not only for Android, but other mobile operating systems, as well.

The monetization gap can be worrisome, but only in the short- and medium-term, at least for those who are able to capitalize on numbers in monetizing their applications. On Android, developers can bank on being able to distribute their apps by sheer volume. Of course, that takes marketing effort, cost and sometimes a stroke of sheer luck. But the point here is that the target markets are different. One can take the more premium, targeted approach, or a volume-based “shotgun” approach. Besides, developers are already building on both major platforms, so gains from one can also translate into marketing gains for the other.