Android Market Growing, But Still Needs Improvement

September 24, 2011
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According to Ovum, Android app downloads are poised to surpass those of iPhone apps this year for the very first time. It’s the result both of people becoming more comfortable with using and downloading mobile apps as well as the growth provided by GetJar, Amazon Appstore and other third-party app marketplaces.

The research firm forecasted that Apple will have a hefty 6.1 billion downloads by year end but this won’t surpass the predicted 8.1 billion surge for Android apps. What’s more, by 2016 it seems that Android downloads will be a little less than double that of the iPhone: 21.8 billion for the former and 11.6 billion for the latter.

That seems like good news for devs but the flip side is that Apple will still be the revenue leader for paid apps. The numbers for app revenues are reversed this time around: iPhone is amassing $2.86 billion by 2016, compared to Android’s $1.5 billion. And that number is still set to rise for iOS since the apps for the iPad aren’t plugged into that figure yet.

So, what’s an application developer to do then? Well, the path to fortune seems to be through freemium. As a short primer, freemium is when a developer offers their app for free but finds a way to monetize users once they get into the groove of using the app. It’s usually used in games since those types of apps need to make the barrier to entry to playing their game as low as possible to compete with other apps. It’s also applicable to a few other app genres like reader and media apps, social apps and other apps that have a high level of engagement.

And freemium is looking quite profitable. As Android gains more acceptance, this only means that more users will have Google-powered devices in their hands and with that, more users eager to try out new apps. And it looks like a few Android devs are already cashing in. Gameview, makers of Tap Fish, have mentioned that the average revenue per user on Android is 30 percent higher compared to iOS. Another developer, Hongkong-based Outblaze, mentioned that they too found the same when comparing revenues between their iOS and Android apps.

One of the reasons why this setup works is because of the openness of Android marketplaces, where incentives can be used to draw people to download apps, an activity that Apple doesn’t allow. There’s also less competition in the Android Market, in a relative sense, and all a dev has to do is make sure that his app gets noticed. Another reason is that Android devs are free to update and improve on their app as they wish, compared to the App Store which often leaves developers’ apps in approval limbo.

But of course, not everything is springtime and roses. A large percent of downloads in the Market go to the top apps and this is an area that Google is trying to address. In fact, the recent revamp of the Android Market app should make discovery of new apps easier, though it seems that more needs to be done to bring amazing long tail apps to the fore. Hey Google, how about showcasing excellent but often unnoticed apps on a visible site?

Another serious threat to Android is piracy. Free distribution is great and all, but for a developer trying to earn his keep, this is a huge disincentive for selling apps on Android. A survey conducted by Skyhook Wireless shows that a large number of devs see piracy as a problem and indeed, a third of those surveyed have replied that it’s costing them over $10,000 in revenue. Of course, freemium can be used to defeat app piracy though do remember that apps like these need to be continuously cared for to create revenue.

Android is fast becoming the handset OS of choice for many and developers need to at the very least explore the possibility of creating for Android or be left behind. In the end, they can always have the best of both by having apps available on each market.

via GigaOm

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