The week between Christmas and New Year's Day saw a record number of Apple's (NASDAQ:AAPL) iOS and Google's (NASDAQ:GOOG) Android smartphone device activations - rising from 20 million last year to 50 million this year according to mobile analytics company Flurry. Earlier, Flurry reported that 17.4 million iOS and Android devices were activated on Christmas day alone, which also broke previous records. This period also saw a record 1.76 billion app downloads on these two platforms, a 47 percent increase over the 1.2 billion app downloads during the 2011 holiday week. Flurry expects the trend of one-billion-download weeks to become the norm in 2013 and that the industry will surpass the two-billion download week during Q4 2013.
The mobile app economy continued to surge last year, with 43.6 billion downloads worldwide in the 12 months ending September 2012. Apple continues to lead the market, in terms of sheer downloads and app store implementation according to ABI Research. ABI ranked Apple first in terms of implementation, ahead of Google and RIM (RIMM) mainly because of its superior monetization, large market share over the app industry and ability to maintain reasonably strict quality control over a large inventory of titles. However, the report credited Microsoft (NASDAQ:MSFT) as having the most innovative app storefront, the Microsoft Windows Phone store.
As ABI senior analyst Aapo Markkanen put it
Although Apple has done a great job capitalizing on App Store's head start as an app distributor, it should really start re-thinking the way it charts the top apps. Microsoft should be lauded for its initiative to extend its ranking algorithm beyond raw download figures, by including factors that can actually measure the customer satisfaction and retention. Retention-based charts are less prone to manipulation, so as an additional plus Microsoft can also afford being more transparent about its approach. Moves like this can help break the developers free from the 'tyranny of downloads', decrease their reliance on costly marketing campaigns, and thus lower the barriers to entry.
All of this should come as good news for Apple and Microsoft, perhaps at the expense of Google, which continues to struggle with monetizing Google Play, its own app storefront. I think both Apple and Microsoft will see healthy growth in app store revenues in 2013 and consider them both good values at current pricing.