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January 09, 2014

Mobile Apps Continue to Thrive as Apple Reaches $10B in App Sales and Dominates Android in Revenue

On Tuesday, Apple announced that 2013 sales from its App Store exceeded $10 billion. That total is expected to increase over the next few years, as Gartner predicted in September that all mobile apps would generate $26 billion in revenue for 2013 and nearly triple to $76 billion by 2017. These totals include ad revenue from apps as well as sales.

The most popular apps come from the gaming sector, with Candy Crush Saga, Minecraft and Clumsy Ninja among the leaders. Apple cites the release of iOS7, with its new user interface and API as a major factor in improved apps. Developers have earned a total of $15 billion since the App Store opened in 2008. Based on cumulative totals of $7 billion a year ago, Apple would have paid $8 billion to developers in 2013. The Cupertino, CA-based company is not content to sit still and has its eyes on China as a new market.

Studies indicate there’s more money to be made developing iOS apps than Android. Although four-fifths of smartphones shipped globally run on Android, according to a Gartner study, that hasn’t led to a similar share of app market revenue for Google. Nearly three-fourths of app revenue, based on downloads from 50 countries in 2013 Q1, were from Apple, according to a Canalys report.

The bottom line: Apple users are more likely to spend money than Android users. Intuitively, Apple users are more willing to spend more money on their devices, so it follows that they would also spend more money on apps.

What does this mean for Android app development? In the short term, developers who sell by the app will continue to favor Apple. Android might be attractive to developers who develop apps not to sell them, but to access a service that charges a fee. However, even that might not work. Usage data suggests many users still treat their Android smartphones as feature phones, tending not to shop or perform more than a few simple activities.

If Google wants to get a bigger slice of the app revenue pie, it must find a better way to monetize apps. Android phones have a wide variety of prices from models under $100 to some Samsung models that are comparable to iPhones and approaching the small tablet size. Targeting the high-end Android users is probably a good start, since that segment is more willing to spend money. 

Edited by Cassandra Tucker

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