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Overview:

The success of Apple's (NASDAQ:AAPL) app store is of no surprise to the public. Recently, Apple has surpassed 1,000,000 apps available in the app store with over 60,000,000,000 downloaded apps and growing. Apple has also treated developers very well, shelling out over $13 billion since the start of the app store.


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An interesting point to be made is that even though the Android world may own the market share by a large margin, developers earn nearly 5x the money producing for Apple's app store.


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For every dollar earned by developers for producing on Apple's app store, the same creators earn a much lower $0.19 on Android.


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More specifically, Apple's main competitor Samsung (OTC:SSNLF) controls the largest portion of this Android world.

Questions:

Three very interesting questions come to mind with regard to the App store that raise interesting points.

  1. Android controls 6.77x more of the marketshare than iOS, so are developers really making more money on Android even when keeping in mind the profit differences?
  2. Why are developers making more on Apple, will this change?
  3. Is Android catching Apple on App downloads?

While there are no pinpoint figures on exactly how much money developers on Android are earning, it is safe to assume that Apple has currently paid out a higher amount to developers over Android.

Interestingly, Android is gaining on the developer front. Hugo Barra, Google's Android VP of product management stated that there have been:

  • 48 billion Android app installs.
  • 2.5 billion app installs in the last month alone.
  • Revenue per android user is 2.5x higher than it was a year ago
  • So far this year, Android developers have earned more money than all of last year.
  • 900 million Android activated devices, up from 400 million activations a year ago.

Finding accurate and reliable information on app store downloads, developer stats and comparable information is hard to find. So I have chosen to rely on the two more accurate links provided above. The Android statistics are from May 15, 2013 and the Apple statistics are from October 22, 2013. There is a five month difference in reliable information, so it is safe to assume that the number for Android have grown in comparison to Apple.


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The point is that Android is not far behind on downloads, and will likely surpass apple in the future. Although Apple will most likely retain its higher total revenue from app sales and higher amount paid to developers over Android for the foreseeable future.


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This chart demonstrating the early period since the start of both app collections demonstrates Apple's lead on total downloaded apps, a title that Apple still holds today with a 60 billion number that has not yet been surpassed by Android. Although Android is gaining fast. This chart demonstrates Apple's early lead during the first 39 months after both stores opened for business.


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Keep in mind that although these charts for apps downloaded from the Google (NASDAQ:GOOG) Play Android app store and Apple's app store have different ending lengths, they do correlate. In May of 2013 Google Play's app store saw 48 billion downloads, the number quoted earlier. Furthermore, Apple saw 50 billion app downloads for the same period ending May, 2013. It does not serve a purpose to compare the next month of the Google Play chart's statistics as the Apple chart is over a different interval, although they do correlate in May.

ADs: An Example

The buck does not stop with app downloads and profit margins. Apple's platforms provide more AD money for application providers than Apple's counterparts. Facebook (NASDAQ:FB) ADs are 1790% more profitable on iPhone over Android, a statistic that Android is even further behind on.

Why Does Apple Earn More?

The reason developers earn more per app and why AD money per App is much higher on iOS over Android is likely the same answer- the user base.

Nanigans, one of the largest Facebook AD buyers, analyzed 200 billion Facebook ADs on mobile devices. Nanigans Senior Vice President Dan Slagen stated that "... on average, iPhone owners make and are willing to spend more money than Android owners -- which is also why profits for app developers are more on iOS than on Android." So it seems that even though the smartphones on Apple and Samsung may have comparable prices, the user base purchasing Apple's phones may have deeper pockets than its Android counterparts. This comparison is likely comparing iOS to the lower end Android phones, as at comparable prices consumers can decide between Apple and Samsung's devices.

Conclusion:

Apple has not only a lead on the total number of apps downloaded, it also earns more money per app for developers. Moreover, Apple earns more AD money for apps than its counterparts.

  • The top 200 Apps on Apple's app store earn $5.1 million, Google Play earns only $1.1 million on these apps.

The Android world is catching up fast in total number of application downloads, aided by a large expanse of Android applications, although one key item remains abundantly clear. Android has not been able to catch Apple on the amount paid to developers, even with Android having an over 80% marketshare. Simple calculations would ascribe to the fact that Android has nearly 7x the user base of Apple, so it should earn more money for developers in theory. On the other hand in reality, Apple still pays out more to developers as this may be a margin that the Android world will not be able to impede. Apple and Samsung may have smartphones that are equal in price, but the premium target market for Apple may include customers who are willing to pay more for applications than their Android using counterparts.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Always do your own research and contact a financial professional before executing any trades. This article is informational and in my own personal opinion.

Source: Does Apple Dominate The App Store?