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It’s widely known that Apple (NASDAQ:AAPL) commands the overwhelming lion’s share of mobile app spending, but few analysts have quantified just how much that gap is between its App Store and the next closest rival, Google’s (NASDAQ:GOOG) Android Market.
Apple’s App Store has generated nearly $5 billion in revenues compared to just $330 million for the Android Market to date, according to research published by Piper Jaffray analyst Gene Munster Nov. 21.
That breaks down to Apple enjoying 85 to 90 percent of the paid apps market, compared to just 7 percent for Google, said Munster, who calculated the numbers based on data from Apple’s public announcements, the Androlib app discovery tool.
Specifically, Androlib data suggested that some 1.3 percent of Android Market apps downloaded were paid. Of the estimated 6.75 billion Android Market app downloads to date, Munster believes only 90 million of those programs were paid apps. Conversely, 14 percent of total App Store downloads have helped Apple realize $4.9 billion in gross sales since its inception in July 2008.
While Google will endeavor to whittle down that gap, Apple will remain the market leader for the foreseeable future.
Munster wrote: “While Google has closed the gap in terms of app dollars spent over the past year and we continue to believe Android will grow smartphone share faster than Apple, we believe Apple is likely to maintain 70 percent-plus share of mobile app dollars spent over the next 3 to 4 years.”
Munster’s research and sentiment highlight the uphill battle Google continues to face in the paid apps market. There are a number of reasons for this.
As an open source platform, Android carries with it some fragmentation and other inconsistencies, which Google has spent the last three-plus years correcting. For example, the company has merged its smartphone and tablet branches of Android with Android 4.0 “Ice Cream Sandwich.”
To polish the Android Market’s rougher edges, Google has made the user interface more attractive, added carrier billing for consumers, and analytics dashboards for developers.
Still, consumers have proven reluctant to pay for Android apps. Developers have been slower to build serious, paid apps that won’t be vetted as stringently as apps are under a far more cautious Apple App Store regime, which is considered porn free and more legitimate.
Munster’s anecdotal data backs up some of the Android fears. He surveyed nearly half of 45 iOS developers at Apple’s Worldwide developer conference also developed for Android. However, all 45 of these iOS developers said iOS was both easier to develop for and easier to make money from their app.
The analyst also surveyed 25 educational technology directors and found that all of them are testing or deploying iPads — but not Android tablets — in their schools.
“These results lead us to believe that Apple will participate significantly in both the education and corporate mobile app economies, enabling the company to maintain 70 percent market share in dollars spent on mobile applications,” Munster concluded.
Of course, Android just notched a 52.5 percent worldwide smartphone market share, compared to 15 percent for the iPhone, according to Gartner’s third quarter report. Google recently said over 200 million Android devices had been activated, which means the footprint remains quite large.
Google has the time to bolster its ability to monetize Android. In fact, that’s what Google Music, which consumers can download from the Android Market, is about — helping users find, purchase and consume music via the cloud and stream it via their computer or Android smartphone or tablet.