Apple still king of mobile apps with over $10 billion in App Store sales

With all the crowing about Apple and iOS having a minority market share in the mobile space, it’s easy to forget that Apple does something with iOS that Google’s still struggling to do: make money — and tons of it — with mobile apps.

Earlier today Apple issued a press release proclaiming that customers have “spent over $10 billion on the App Store [1]” on almost 3 billion app downloads in 2013, with more than $1 billion of that money having been laid down in December alone.

The lion’s share of the app sales were — no surprise here — games, with familiar names like Candy Crush Saga and Clumsy Ninja heading the list. Previous research [2] by app-analytics outfit Distimo has shown that both the Apple App Store and Google Play get the vast majority of both their downloads and revenues from games.

But the two stores diverge sharply when it comes to revenue. Although Google Play made significant advances [3] in 2013, it’s still way behind the Apple App Store, with revenue share split 65 percent Apple, 35 percent Google as of mid-September 2013, up from a 74/26 split back in April. One possible long-term bright spot for Google: The overall mobile market’s growth has flattened out somewhat over the course of the year, making it incrementally more possible for Google to steal a bigger slice of the pie.

How the companies obtain those revenues is another story and hints at major differences between the audiences for iOS and Android devices. VisionMobile’s recent Developer Economics survey, conducted midyear in 2013, showed that iOS’s leading source of app revenue [4] was in-app purchases and pay-per-download, while Android made most of its money from both pay-per-download and in-app advertising. What’s more, developing for iOS yields five times as much revenue [5] per download.

When dealing with in-app purchases, the margin is about twice as much in iOS’s favor, and the difference between platforms for revenue garnished from in-app advertising only varies by 10 cents on the dollar.

Still, the big takeaway is clear: iOS may be the smaller platform in terms of market share, but it’s the big one as far as revenue goes. Its users have more money to spend — not surprising considering the way Apple devices still have the cachet of luxury goods.

Jim Edwards of Business Insider [6] put it this way: “Androids are simply dumbphone replacement devices and treated as such … Despite the features at their fingertips, Android people use their phones for calling, texting, and playing Bejeweled. They ain’t shopping.”

IBM came to similar conclusions [7] when it crunched iOS and Android transaction traffic over the Thanksgiving weekend. It found that iOS users were spending $1.27 for each $1.05 spent by Android users during Black Friday, with iOS traffic being 28.2 percent of all online traffic for that time (Android accounted for 11.4 percent).

What’s tougher to determine, and what may complicate the picture, is how much monetization Google derives from Android as a whole apart from app sales. Much of Google’s approach to Android has been to use its services — search, mapping, suggestions, and so on — to quietly monetize user behavior via ads and sponsored placement. How much revenue gets generated through these mechanisms by Android generally is difficult to break out, since Google’s financial statements (including the most recent one ending September 2013 [8]) don’t have advertising revenues listed by source.

If Google is able to close the financial gap between Android and iOS app sales through other means — and augment that by sheer volume of sales [9] — it would throw a lot of light on the company’s overall mobile strategy. But for now, it’s clear why Apple is resting easy in the certainty that it doesn’t need to be No. 1 to be top dog.

This story, “Apple still king of mobile apps with over $10 billion in App Store sales [10],” was originally published at InfoWorld.com