Apple App Sales Outpace Competition 8-to-1

By Chris Marasco - August 9, 2012 | Tickers: AMZN, AAPL, FB, GOOG, MSFT | 0 Comments

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My friend DJ is a cunning, savvy, Silicon Valley area tech entrepreneur.  And if you have a job, then you probably want to download his SimpleMileLog app because it will save you money on your taxes.But if your mobile phone is running Google (NASDAQ: GOOG) Android then you are out of luck.  Same goes if your phone sports Microsoft (NASDAQ: MSFT) Windows. That’s because DJ only develops on iOS.  He loves Apple’s state-of-the-art developer tools, and its push towards great content. And he is not alone.

Many of today’s developers are focusing on the high-end Apple (NASDAQ: AAPL) apps and shunning all others. As a result of Apple’s dominance, it fully owns the mobile app space.  Take Apple’s daily revenue, for example. Taken from a recent article citing Distimo, an analytics company focusing on app stores:

Distimo and analyst firm CCS Insight launched their App Vu Global service in early April 2012, tracking downloads and revenues from the app stores. Its initial findings claimed that Apple's App Store is generating $5.4 million every day in app sales for the top 200 grossing iPhone and iPad apps. For Google Play, their estimate was just $679,000 for the top 200 grossing apps on Google Play, or about 12% of Apple's revenue.

Part of that has been because iPhone users have shown themselves willing to pay for apps in a way that Android users so far have not. In January 2012, Apple said that since 2008, when its App Store opened, developers had been paid a total of $4 billion, of which more than $700 million was paid in the last quarter of 2011 alone. Google hasn't given a comparable figure, though Horace Dediu, who runs the Asymco consultancy, puts the figure for Google's total app sales in 2011 at $300 million - meaning developers would get $210 million in total.

In short, revenue from Apple apps owns second-place Google to the tune of 8-to-1.

Originally the situation looked to be different when Amazon (NASDAQ: AMZN) announced that it would launch its Test Drive feature, allowing Android users to try apps for free before paying for them.  But that feature seemed little help.

Now these firms must contend with Facebook’s (NASDAQ: FB) new app store, launched in early June, which serves as another distribution channel for Apple apps.  And Facebook’s store has gained traction as a result of it offering one free app every week (you can take a look at Facebook’s sleek design here.)

But will the upcoming Windows 8 have something to say about Apple’s dominance?  Probably not. The strength of the Windows 8 system is that it is expected to go mass market and to appeal to normal consumers.  But that is also its weakness.

With lower-end (mass market) users, developers are more likely to make free apps supported by advertising revenue.  And if a developer is able to earn more sales from developing on Apple’s iOS platform, there is a huge detraction from creating the app using the far-different Windows platform. 

Further, Apple products have fewer devices to contend with.  It is launching its 5^th iPhone shortly.  How many Windows and Android phones are out there?  I don’t have time to count that high.

So what are investors to do with this new data?  Use it to keep tabs on comparable revenue.  While apps are secondary revenue streams for the companies in question, they still provide a strong source of income. 

Take Apple’s app revenue, for example:

$5.4 million per day x 365 days = $1.97 billion in revenue

Should Android or Windows start to gain more share, look for either Apple’s revenue figures to drop or for Google’s and Microsoft’s to rise.  Then place your trade accordingly. 

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