Apple leads the mobile industry when it comes to both the number of apps and games in the App Store and the revenue from those apps, but Google is coming up fast. Google’s coming up fast, though, with a reported one billion Android devices, the majority of which use the Google Play store in over 190 countries. (Not to mention that Android has an 81 percent market share on the world’s mobile operating systems.)
Variety has reported that Google isn’t far off from knocking Apple off its mobile perch. The site reports that in the previous month, Germany, the second largest mobile market in Europe, managed to become the first country where Google surpassed Apple in revenue for applications (from data compiled by App Annie). That could be the start of Google’s dominance in mobile for the year, as many estimate that it could best Apple’s app revenue worldwide by the end of 2015.
Jamie Rosenberg, the vice president of digital content for Google Play, did indicate that there’s more to be tracked here besides reach and revenue. “As we measure ourselves, we ask, ‘Are we getting more and more out of every Android device that gets activated, and is our performance increasing over time ‘ And that has been the case.”
The previous year’s revenue for the company sits somewhere between $4 and $5 billion, right up there with YouTube’s profits. Credit Suisse analyst Stephen Ju believes that Google Play is even more valuable, thanks to the lower costs to run the company, which results in higher operating profit and free cash flow. There are some key things to note about the Google Play store: First, that it derives over 90 percent of its revenue from games, and second, it does not exist in the biggest mobile market in the world, China. China is served by dozens of smaller Android markets, many of which can also be found elsewhere in Asia. Amazon, as well, has its own Amazon Appstore for its Android devices, and that takes a significant share of Android app revenue in many countries.
While Google is gaining on Apple’s app revenue, that doesn’t mean Apple’s ready to give up without a fight, though. The company still has per-capita profitability, sharing $10 billion over the past 12 months with developers – that’s $3 billion more than what Google Play paid. Apple also manages to achieve 70 percent more revenue from apps than Google Play’s, despite the fact that the Android-based service has 60 percent more app downloads than Apple. Plus, after the stunning 49 percent smartphone sales increase last quarter, Apple is now the #1 smartphone seller in the world.
Android’s profitability could rise even further, though, according to Radio Free Mobile analyst Richard Windsor, who stated, “Simply because there will be many more Google Play devices than iOS devices in the longer run.”
David MacQueen, a mobile analyst for Strategy Analytics, also chimed in about the shortage of apps on Android compared to iOS, indicating that operating systems will still collect big-time from “freemium”-based apps. “For Google, the profitability of its app store, per se, doesn’t matter,” he said. “Having good reach matters, because the advertising revenue is of critical importance.”
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