App store dirty secret – 95% of downloads are free
As the iPhone App store gold rush continues, it is interesting to ask how much money is being generated from the platform’s 30 000 + apps and 60 000 + developers. Apple recently announced a billion apps have been sold, and analysts have estimated the platform would generate $1.2 billion for Apple in App sales in 2009.
A new analysis indicated the situation is not quite as rosy. 75% of applications are for a fee, from developers hoping to strike it rich, but it seems the vast majority of the billion apps downloaded have been free. The ratio is hotly debated, but a range of 1:10 to 1:20 is generally agreed, with some speculation a ratio as low as 1:40, leaving only between 50 to 100 million apps actually being sold for a fee.
Recent surveys have shown an average cost of for fee apps only being $2.65, with the median being lower. This means the 60 000 developers have generated between $132.5 million and $265 million, with Apple taking 30 % of this.
This means on average, on the lower end of the scale, each developer only earned $3,091 per app, hardly a living wage or enough to build a business on when the app may have taken 3 to 6 months or more to develop.
Of course we know the reality is in fact that a very small minority of companies will get the lion share of the money, while the vast majority earn only a few hundred, if that, for their efforts.
Which of course brings me to the point of this article – how it applies to Windows Mobile.
Developers contemplating which mobile platform to develop for should resist being seduced by headline numbers like 1 billion downloads. With applications on the Windows Mobile platform having average selling prices as much as ten times higher than on the iPhone developers should be asking themselves serious questions about which platform have the greatest potential for recouping their development costs and actually earning them a living.
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you make a good point but as a lot of people go for the iphone because “its cool” same the devs will go with “a billion downloads?”.
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one could as well turn your point around and ask himself why it is that a windows
mobile USER has to pay on average ten times as much for an app that doesnt have
ten times the functionality and surely cant hold a candle to the iphone in
the eye candy department either.
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Dawid Gatti Reply:
May 17th, 2009 at 6:50 am
As Vassili form Spb Software pointed out in our podcast – http://pda.pl/news/the_first_guest__odcinek_nr_14/ (i wanted to link to wmpoweruser.com but it seams that Surru didn’t put it).
The poin that Vassili didn’t was that programs for WM are much more complicated and whit much more features then the one for the iPhone. That is the reason why they are so expensive.
The free apps for the iPhone are similar to what people from XDA are doing. They do to a ton of free apps that are simple can do most of the time one thing and that is it.
i did play whit the Android platform to. and the apps on that market are most of the time free and similar to all the free apps for all the platforms – simple and most of the time they do only one thing.
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I certainly think WM apps are overpriced, especially when you look at how much it costs for the quality of apps on iPhone.
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that programs for WM are much more complicated and whit much more features then the one for the iPhone. That is the reason why they are so expensive.
Rubbish, maybe they are more expensive as it costs a fortune to buy the dev software for Windows Mobile and it is far more complicated to develop for it as Microsoft have not produced a decent SDK with API’s unlike Apple.
This is another anti iPhone story, facts are the platform is a huge success and will be even more so when 3.0 comes out.
Windows Mobile is miles behind now and even when 7 comes out it will take a long time for developers to start producing top end applications and lets be honest, every other mobile OS will be another version further on again.
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Rovex Reply:
May 17th, 2009 at 8:32 am
Yes but what ‘top end applications’ does the iPhone have?? Hardly any. 95% of its apps are pointless gimmicks, its got very few killer apps.
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Dawid Gatti Reply:
May 17th, 2009 at 1:14 pm
As Loke Uei sed in another episode of the podcast – you can download and use Visual Studio 2005 for free – http://www.microsoft.com/windowsembedded/en-us/products/spark/default.mspx if for few years you don’t do commercial apps.
and the SDK for WM have tons of stuff. So creating a flash light app is as simple as on the iPhone.
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Excellent article.
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Whatever, it has a fantastic music player for one out of the box, best newsreader on any platform I have used, gaming is a different class to any other mobile OS, Facebook application which it has had since day one of the App Store, not 12 months after like winmo, twitter applications, ereader, kindle, youtube, ebay, evernote, google earth, skype, sky+ remote recored, come on, there is nothing better on winmo and it is going to get much better with OS 3.0
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aleis Reply:
May 17th, 2009 at 9:53 am
please!
we have pandora, qik, youtube pocket twit, live search, google maps, spb shell 3.0 skype, SLINGPLAYER, remote desktop!
we have skyfire, ucweb, facebook ms messenger OFFICE (the entire suite!) what the iphone has is a GPU!
in my opinion that is what sets it apart.
but the phone cant even handle it having a horrible battery life!
i woke up to a parrallel world or something today!
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simbadogg Reply:
May 18th, 2009 at 12:57 am
wow…you really are spoken like a tru apple fanboy. in all honest, name an application that iphone has, and i’ll be able to (after a lil searching) find either the same app, or a basically the same app by a different name with winmo. there have been literally dozens of articles written about this on the web, about how the “only on iphone” apps, really aren’t only for the iphone. on top of that, i can easily name a dozen apps which do not, and will never have a iphone counterpart due to apples gestapo like control of what is and isn’t permitted on the app store.
Mmm…other day i was watching the daily show via hulu on my phone while riding the metro. skyfire is a prime example of something that will not, and cannot be made available in the app store. its funny though, there have been literally dozens of discussions similar to this on the internet, i hope you dont pull the classic apple reaction and say “_______ feature (in this case an app) is useless…who needs it anyways” then once you have it added (a2dp, clipboard functionality for example) they talk about how sweet and useful it is.
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aleis Reply:
May 18th, 2009 at 3:51 pm
actually im a winmo fanboy
omnia with 6.5 wozzer rom baby!!
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just for an apples to apples comparison, how many apps have been downloaded from the microsoft apps store??
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A better question would be to ask Handango, Pocketgear, Mobihand or any number of companies actually making a living of selling Windows Mobile software.
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It just amazes me that if Windows Mobile is so great then why do we constantly see articles like this popping up, surely you should be talking about the positives of your chosen platform.
As far as applications go, how about a decent Wordpress application, Google Earth and that’s not even mentioning gaming.
I am not an Apple fanboy at all, I only switched from Winmo last year and may return if 7 lives up to expectation, I am well aware of the iPhones short comings but as an all round device with an easy to use interface and superb media player it is much better for my persoanl requirements.
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admin Reply:
May 18th, 2009 at 7:58 am
If you read the rest of the site, rather than the 5% iPhone ones, you would see many,many positive articles about Windows Mobile.
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This article is nothing more than spin from a WM fanboy. Not all developers have making money as a priority. Infact for many developers fame is more important.
To bunch these two types of developers together in order to analyse profit is deliberate distorting the entire picture.
Consider windows mobile, first the most popular windows mobile apps are also free. For example S2U or advanced config. The real reason why windows mobile apps cost so much is due to the low through put. This has nothing todo with the number of WM users but the large piracy rings around windows mobile. For every piece of software sold for the windows mobile platform countless pirate installs are made. I stopped developing for windows mobile and moved to Android after seeing my softare being repeatedly stolen by the vast majority of WM users who are dishonest thieves.
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admin Reply:
May 18th, 2009 at 9:10 am
75% of iPhone apps are not free, indicating that the majority of developers are out to make money, not fame.
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“75% of iPhone apps are not free, indicating that the majority of developers are out to make money, not fame.”
A developer selling an app at 99 cent is not out to make a lot of money. The fact that you are surprised that people download free apps more than those that cost money shows a lack of understanding human nature.
I would say the ratio of illegal software downloads for WM is much greater 1:20. A piece of software I built I found had at least 200 illegal downloads per copy I sold and thats just on one forum. Develop for windows mobile and you leave your software and hard work open to rape.
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admin Reply:
May 18th, 2009 at 10:19 am
99c per app is due to competitive pressure, not desire.
It is very well known that distribution increases 10 fold between when iPhone apps are free vs paid. There is published research on it.
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“99c per app is due to competitive pressure”
No its not. 99c apps are normally gimmick apps or very basic. I have done a few myself. I charge 99c as I want to see how many people want to actually use the app. If I distribute it for free everyone will download it. Quick office is $19.99 and it sellsextremely. If you have a good app at a fair price on iphone it sells even if the price is 30 dollars. Not only do you have a large consumer base but piracy is at a minimum.
“distribution increases 10 fold between when iPhone apps are free vs paid”
Again you completely misunderstand human nature, people download everything free simply because its free. Its also likely that they uninstall 90% of the free software they download. If I put a basket of apples out in a shop for free they will be gone in minutes. If I charge 30c and only 1 is sold in the same period so I jump to some wild conclusion about distribution on free vs charged is a waste of time. Do you really think its any different from the current model used by windows mobile.
I had a minimum of 1:200 ratio of sales to pirated downloads on windows mobile what does that tell developers about windows mobile.
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admin Reply:
May 18th, 2009 at 11:39 am
http://blog.publicisdigital.com.au/2009/02/25/price-elasticity-of-iphone-applications/
Lets not drift of the point:
1) If developers were doing it for Fame, they would achieve maximum distribution if they made their app free.
2) Applications sell better the lower the price. Free is the extreme of this, but even lowering your price by 50% will increase sales dramatically.
To get back to the real point of the article – some developers may get rich quick on the iPhone platform, the vast majority wont.
Lastly, there is piracy of the iPhone platform also.
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I have not drifted of the point at all and the article you point to proves my very point.
I quote “What it does tell us is that consumers are choosing to pay and download applications based on several criteria, not just price. In reality all things are rarely equal – so you may have applications with differing levels of involvement, quality and competition that consumers are willing to download on based on their overall merits and not just price (or whether it is free or not).”
I have already demonstrated a prime example of this Quick Office with high volume at $19.99.
“If developers were doing it for Fame, they would achieve maximum distribution if they made their app free.”
Not true, the number of downloads for free apps does not mean its is popular. Most people who download free stuff may play with it a while but then uninstall as they never use it. This is why I put a $99 cent price on all my apps, I consider these as good as free. On android I charge various prices for all my apps however free versions exist that contain advertising (I consider these trials).
“Applications sell better the lower the price. Free is the extreme of this, but even lowering your price by 50% will increase sales dramatically.”
The price or number of sales is not important, the important statistic is profit. If you double your price you only need to sell half as much to make the same profit.
Again the article you posted shows this and I quote
“The second case study we used (case study C, above) yielded a decease of 50% in downloads when the cost was increased by 100%, measuring a price elasticity of -0.5 meaning that this application was conversely relatively inelastic to changes in price.”
In this case study the the price or number of downloads did not have any effect on the profit. Doubling price halved the sales, however the profit would have been the same. So the real question for developers is lower price to get your software on more devices or higher price so you do not flood the market. Guess which ones who want the fame go down.
“some developers may get rich quick on the iPhone platform, the vast majority wont.”
Any person who writes good quality useful software will make money on the iphone thats without doubt. Those who spend a few hours knocking some crap together in a few hours will not. Thats a big difference.
“Lastly, there is piracy of the iPhone platform also.”
Yet most iphone users do not use pirated software where as on windows mobile most people use pirated software exclusively. On the iphone its inconvenient, you lose automatic updates etc.
Instead of this tripe article clearly posted from a fanboy unobjective point of view why not identify the real problems of the iphone market, the reasons I moved to android despite the smaller consumer base. Showing clearly I am not in it just for pure profit even though I charge for apps. Things like the huge delays for payment from apple. The problems with returns etc. Why not use these issues constructively trying to point out issues Microsoft need to address in their own market place plans and try an improve your own platform. Like the huge trial period meaning huge delay in developers getting paid. With google I get my money within the week. Its blinkered unrealistic bury the head in the sand attitude that left windows mobile several years behind apple and google.
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Curly Reply:
May 18th, 2009 at 2:08 pm
Got to agree with Kieran here. Until WM7 is released MS can’t sériously compete against the iPhone/Appstore in mindshare and mmarketshare growth. I don’t own any Apple poduct (have several WM phones and PDA’s since 2001) but anybody who believes that WM6.5 (and the first release of the Marketplace) is going to change anything to the current situation is just going to be disapointed. and Even MS knows this. WM6.5 is just a AKU update to 6.X (or ServicePack if you want). WM on CE 5.x is a dead end and developing for it is kinda of nonsensial given the big changes coming with WM7. That’s why the Marketplace isn’t comming to 6.1 devices. For MS, the less 6.X devices on the marketplace the better it is for the futur. Regarding the UI, anybody who has used an iphone for more that 5 minutes and has an open mind knows that the WM6.X UI is just trash. You’ve got a 100% OpenGL/VG accellarated OS/UI (backed by a great SDK) vs a GDI mismtached non accelerated OS/UI dating back 2000. MS knows this and that’s why they are butsting their asses on WM7. But WM6.5 is DOA from a marketshare POV (meaning that it’s not going to make MS gain marketshare.stagnate,yes, grow, no.). The sooner WM7 is here the Better.
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admin Reply:
May 18th, 2009 at 3:53 pm
“Any person who writes good quality useful software will make money on the iPhone thats without doubt.”
I seriously doubt this guarantee. With 35 000 apps all in one directory, sorted by download popularity, I am much more sure many good quality useful apps get lost in the sea of fart apps.
And many developers complain about this.
Instead of wasting your time posting here, why don’t you do a blog post about your difficulties with Apple, and warn your fellow developers of their folly?
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Kieran Reply:
May 19th, 2009 at 9:26 am
“I seriously doubt this guarantee. With 35 000 apps all in one directory, sorted by download popularity, I am much more sure many good quality useful apps get lost in the sea of fart apps.”
Pure conjecture that has no place in reality. Neil Young for example formed Ngmoco in 2008 and are already going into 10s of millions just from the iphone platform. Good applications always come to the top and always sell well.
“Instead of wasting your time posting here, why don’t you do a blog post about your difficulties with Apple, and warn your fellow developers of their folly?”
Apple developers are already well aware of their problems with apple. If you would actually do a bit of research you would actually see the problems with the iphone and you would also see your article is inaccurate and in noway reflects the real issues or problems witht he app store.
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admin Reply:
May 19th, 2009 at 12:54 pm
If he is earning 10’s of millions, that meant one developer out of 60 000 (0.001%) is taking 5% of the money.
You realize 20 more like him, and there will be nothing left for the 59,980 lazy, incompetent programmers.
Or maybe there are actually good apps which are drowned?
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Kieran Reply:
May 19th, 2009 at 1:27 pm
Jumping to another conclusion. The marketplace is not the only way to leverage funds from the iphone. This does not just come from app sales but investments and also advertising. By March 2009 Ngmoco had 3 games with over 7 million installs. Norwest Venture Partners alone invested $10 million into Ngmoco this year. Again good applications that people want or need on a good platform will sell. The marketplace is a good platform not to make quick money through lazy development but build a strong company.
my iphone coworker says he hates the app store right now.
at first he said it was great, but now its so much junk its hard to get something good!
an being the winmo fanboy i am i laugh inside
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JNGold Reply:
May 18th, 2009 at 6:17 pm
Well then your coworker is not very knowledgeable or is just lazy. Granted there is a bunch of junk in the app store but for those who know what functionality they want/need there are tons of web reviews/sites that assist in weeding out what’s garbage and what is not. There’s even free apps that allow you to read app reviews on the iPhone and then click a button to go to the app in the app store. Also, if you are familiar with a partiucular software development shop like Sbp or SBSH, you can be relatively sure that their product will be a quality one for the iPhone.
The same situation resides for the WM market. There’s lots of junk there too and even worse, the junk is spread out over multiple online stores like Handango, Pocketgear, and MobiHand.
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aleis Reply:
May 18th, 2009 at 6:52 pm
well…we have google
example: http://www.google.com/search?hl=en&q=windows+mobile+skyfire+cab&btnG=Search
take the cab load it done.
TOP THAT!
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