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It's a two-way street. Despite selling less than 20% [1] of smartphones across the world, its App Store accounts for over 64% [2] of app revenue. Apple and its

It's a two-way street. Despite selling less than 20% [1] of smartphones across the world, its App Store accounts for over 64% [2] of app revenue. Apple and its developers somehow built an App Store that people are willing to spend more money on. If it's purely thanks to developers, why isn't there more revenue on Google's Play Store? [1] https://www.counterpointresearch.com/global-smartphone-share/ https://www.counterpointresearch.com/global-smartphone-share... [2] https://sensortower.com/blog/app-revenue-and-downloads-q1-2021 https://sensortower.com/blog/app-revenue-and-downloads-q1-20...

actuator 5y ago
This feels like such a disingenuous argument. Most of the countries where Android sells well are countries with way lower purchasing power and this would even reflect in sales of all software, not just Android one. Also, Android phones in China are not necessarily using Play Store. Most of the sales of Android phones are at a lower price bracket which might indicate the purchasing power of customers, so they would naturally have less purchasing power than ones on iOS. People with more purchasing power would spend more on even apps and this reflects in the App Store revenue. There are certainly people who buy Android flagships because they prefer the platform/device but this might not be true for lower end Android phones. iPhone has an aspirational value in many parts of the world.
- smoldesu 5y ago
  I hate seeing these downvotes, because you're absolutely right. The parent comment is missing that the average price of these Android phones is often an order of magnitude less than the price of the average iPhone, so it makes sense that the phone which costs 10x as much has people willing to spend more money. It's not rocket science, and arguably not even economics.
- playpause 5y ago
  It’s not clear how this is relevant to the parent’s point. Android phones are also available in rich countries.
  - smoldesu 5y ago
    Sure, but we aren't talking about Android phones. We're talking about platforms, since that's what Apple wants to sell. The barrier to entry for this platform is money, and many people cannot afford to use their platform, therefore it stands to reason that only people with a modest expendable income will buy an iPhone. It then also makes sense that those same users will also spend more money on the App Store, since they also had the expendable income to buy a "premium" product.
    - akiselev 5y ago
      > It then also makes sense that those same users will also spend more money on the App Store, since they also had the expendable income to buy a "premium" product. Those users will also be more likely to spend on apps and accessories in order to justify or supplement the much bigger phone purchase. Someone who's got the same amount of expendable income but chooses a cheap android for frugality is also more likely to be frugal in extraneous purchases like apps, especially when free but slightly inconvenient alternatives are available. At the end of the day, focus on the customers not the app platforms.
      - smoldesu 5y ago
        So, amid all of this, how would introducing third-party app stores on iOS somehow damage this status quo? What is the justification for refusing to allow it?
        akiselev 5y ago
        I was adding to your comment, not continuing the argument.
    - axelthegerman 5y ago
      on top of that it's a chicken and egg problem too. Because purchasing power is higher, developers also charge more compared to similar apps on Android
015a 5y ago
I'm not 100% sure on this, but I've suspected that this often-quoted disparity has something to do with China, and how Apple still controls iOS app distribution in China but the Play Store has much lower usage. So, you get weird aggregates because the total revenue numbers don't include the Chinese specific Android app stores (which, by the way, are insane; Huawei takes a 50% commission on game sales in their's, and its the biggest by far). All given the size of the Chinese market, their love of mobile games, and the massive portion of App Store revenue games represent. That's not to say the App Store isn't more profitable than the Play Store, per user, just in the US, but its a closer margin here, and I think the massive disparity on a global scale has to signal that something else is going on (in addition to the obvious: Apple doesn't make good cheap phones, just not in their DNA, but Android manufacturers do, so lower income individuals will bias toward Android phones, and these people would spend less in the associated application stores)
- alexkcd 5y ago
  iOS apps are more profitable on a per install basis. So the discrepancy cannot be explained by there being multiple Android stores. Your hypothesis in brackets is the more likely explanation. Source: I worked on an app with millions of paid subscribers.
  - oblio 5y ago
    iPhone had first mover advantage and comes from an American company. As a result iPhones have 50% of the smartphone market in the US, and Americans have the highest disposable income per capita of any large country (>20 million people). iPhones tend to have much smaller market shares outside of the US. In some places they're maybe around 30% but generally they're much, much lower.
    - Grustaf 5y ago
      iPhone has a smaller market share in poor countries. In rich European countries the market share is much higher than in the US. In Scandinavia seeing an Android phone is a rare occurrence, if your friend has one you're surprised and ask how come. It's a function of wealth, not first mover advantage. Well off people choose iPhones. That should tell you something.
smoldesu 5y ago
Because Apple markets and sells a product to the middle class, who are willing to spend that kind of money. Furthermore, the Indian market is almost entirely ignored by Apple, so it's no wonder that they're able to get Android phones into so many hands. The optics of this check out, are you trying to suggest that Apple's App Store is magically more profitable than Google Play, therefore better?
- leokennis 5y ago
  So Apple’s argument stands… Basically, Apple is a wealthy neighborhood. If you sell nice bags or expensive cars, you want to be near the people who can afford them. So you need to rent store space in the wealthy neighborhood. Where rent is higher than in the outskirts. Sure you could try to sell your goods in the outskirts (the Play Store) but you won’t sell as much. To bring it back to non-metaphors. Apple is the only maker of premium phones. Therefor people who are willing to spend on apps are very often iPhone users. So if you want to reach these people and their money you need to be on the App Store. Apple knows this, and charges developers accordingly for the privilege.
  - smoldesu 5y ago
    > Apple is the only maker of premium phones So by your own admission, Apple has a monopoly on the premium market, and is using that power to broker their audience for a premium fee to developers who simply want to sell their code to someone who's willing to pay for it? That is one of the most dystopian arguments I've ever heard, bravo.
    - mrkstu 5y ago
      Is a segment a market? And it is also simply untrue that Apple is the only premium handset maker- plenty of Chinese competition in China and Samsung elsewhere. It is dominant in the segment but it is at best part of a duopoly.
    - leokennis 5y ago
      I’m not sure if it’s a monopoly, but a stronghold for sure. I’m not seeing how Apple’s behavior is any different than that of other players who have a stronghold in their markets though? It’s exactly the same with $10.000 rents in San Francisco or super expensive country clubs where you can mingle/deal with fellow rich people: it’s expensive to get access to a scarce resource. Apple has the scarce resource (people willing to pay for apps) so they charge you a lot of money to access it (30% of your revenue).
shkkmo 5y ago
If Apple's AppStore is really so good, it should be able to withstand a little healthy competition from 3rd party stores. Who knows, a little competition might even inspire the AppStore to become even better?
- tshaddox 5y ago
  One could argue that this is a bit like saying “if McDonald’s burgers are so good, they should be able to withstand putting competing restaurants’ burgers on their menu.”
  - swiley 5y ago
    It's more like saying "if McDonald's burgers are so good they should be able to withstand competing restaurants in the same town." The users buy the phone, not Apple. It's amazing this is even contraversial.
    - tshaddox 5y ago
      I don’t see how an individual iPhone is analogous to an entire town. Is a video game console also analogous to an entire town?
      - swiley 5y ago
        In the analogy you have to buy a house somewhere else if you want to eat anything else. It's really not a complex idea, hopefully that's enough for you.
      - shkkmo 5y ago
        > Is a video game console also analogous to an entire town? Kinda, except that video game consoles, unlike iPhones, usually allow you to play physical media that you can buy from any source (so consoles aren't quite as bad.)
  - smoldesu 5y ago
    No, this is more like asking McDonald's not to blow up new restaurants within a week of them coming to town because they didn't "ask permission" from them first.
tobr 5y ago
iPhones are more expensive on average, hence used by people who spend more money on average.
npunt 5y ago
The simple answer is people with more disposable income buy iPhones. Smart of Apple to position themselves this way in the market and build a product good enough to sustain that position, but I don't think that invalidates Marco's argument.
igornadj 5y ago
The comments in this thread are pulling this idea apart, but the fact of the matter is that before the App Store, people were not willing to pay for apps. Apple created the market singlehandedly. How far this extends into the current day is up for debate, and how much rent keeping Apple should be allowed to do, sure, but being dismissive of the instrumental role Apple played in the past and to this day is turning a blind eye.
- actuator 5y ago
  > but the fact of the matter is that before the App Store, people were not willing to pay for apps. Apple created the market singlehandedly. Umm.. this is some serious revision of the history. - People did pay for apps. I along with plenty of other devs happily paid for Sublime Text while not going through an app store. - There have been app stores that predate 'iOS App Store' like the Steam store, people paid for apps in it as well. It is infact cross platform and competes with other app stores. Apple did not invent app distribution or the concept of paid apps.

actuator 5y ago

This feels like such a disingenuous argument. Most of the countries where Android sells well are countries with way lower purchasing power and this would even reflect in sales of all software, not just Android one. Also, Android phones in China are not necessarily using Play Store. Most of the sales of Android phones are at a lower price bracket which might indicate the purchasing power of customers, so they would naturally have less purchasing power than ones on iOS. People with more purchasing power would spend more on even apps and this reflects in the App Store revenue. There are certainly people who buy Android flagships because they prefer the platform/device but this might not be true for lower end Android phones. iPhone has an aspirational value in many parts of the world.

smoldesu 5y ago
I hate seeing these downvotes, because you're absolutely right. The parent comment is missing that the average price of these Android phones is often an order of magnitude less than the price of the average iPhone, so it makes sense that the phone which costs 10x as much has people willing to spend more money. It's not rocket science, and arguably not even economics.
playpause 5y ago
It’s not clear how this is relevant to the parent’s point. Android phones are also available in rich countries.
- smoldesu 5y ago
  Sure, but we aren't talking about Android phones. We're talking about platforms, since that's what Apple wants to sell. The barrier to entry for this platform is money, and many people cannot afford to use their platform, therefore it stands to reason that only people with a modest expendable income will buy an iPhone. It then also makes sense that those same users will also spend more money on the App Store, since they also had the expendable income to buy a "premium" product.
  - akiselev 5y ago
    > It then also makes sense that those same users will also spend more money on the App Store, since they also had the expendable income to buy a "premium" product. Those users will also be more likely to spend on apps and accessories in order to justify or supplement the much bigger phone purchase. Someone who's got the same amount of expendable income but chooses a cheap android for frugality is also more likely to be frugal in extraneous purchases like apps, especially when free but slightly inconvenient alternatives are available. At the end of the day, focus on the customers not the app platforms.
    - smoldesu 5y ago
      So, amid all of this, how would introducing third-party app stores on iOS somehow damage this status quo? What is the justification for refusing to allow it?
      - akiselev 5y ago
        I was adding to your comment, not continuing the argument.
  - axelthegerman 5y ago
    on top of that it's a chicken and egg problem too. Because purchasing power is higher, developers also charge more compared to similar apps on Android

015a 5y ago

I'm not 100% sure on this, but I've suspected that this often-quoted disparity has something to do with China, and how Apple still controls iOS app distribution in China but the Play Store has much lower usage. So, you get weird aggregates because the total revenue numbers don't include the Chinese specific Android app stores (which, by the way, are insane; Huawei takes a 50% commission on game sales in their's, and its the biggest by far). All given the size of the Chinese market, their love of mobile games, and the massive portion of App Store revenue games represent. That's not to say the App Store isn't more profitable than the Play Store, per user, just in the US, but its a closer margin here, and I think the massive disparity on a global scale has to signal that something else is going on (in addition to the obvious: Apple doesn't make good cheap phones, just not in their DNA, but Android manufacturers do, so lower income individuals will bias toward Android phones, and these people would spend less in the associated application stores)

alexkcd 5y ago
iOS apps are more profitable on a per install basis. So the discrepancy cannot be explained by there being multiple Android stores. Your hypothesis in brackets is the more likely explanation. Source: I worked on an app with millions of paid subscribers.
- oblio 5y ago
  iPhone had first mover advantage and comes from an American company. As a result iPhones have 50% of the smartphone market in the US, and Americans have the highest disposable income per capita of any large country (>20 million people). iPhones tend to have much smaller market shares outside of the US. In some places they're maybe around 30% but generally they're much, much lower.
  - Grustaf 5y ago
    iPhone has a smaller market share in poor countries. In rich European countries the market share is much higher than in the US. In Scandinavia seeing an Android phone is a rare occurrence, if your friend has one you're surprised and ask how come. It's a function of wealth, not first mover advantage. Well off people choose iPhones. That should tell you something.

smoldesu 5y ago

Because Apple markets and sells a product to the middle class, who are willing to spend that kind of money. Furthermore, the Indian market is almost entirely ignored by Apple, so it's no wonder that they're able to get Android phones into so many hands. The optics of this check out, are you trying to suggest that Apple's App Store is magically more profitable than Google Play, therefore better?

leokennis 5y ago
So Apple’s argument stands… Basically, Apple is a wealthy neighborhood. If you sell nice bags or expensive cars, you want to be near the people who can afford them. So you need to rent store space in the wealthy neighborhood. Where rent is higher than in the outskirts. Sure you could try to sell your goods in the outskirts (the Play Store) but you won’t sell as much. To bring it back to non-metaphors. Apple is the only maker of premium phones. Therefor people who are willing to spend on apps are very often iPhone users. So if you want to reach these people and their money you need to be on the App Store. Apple knows this, and charges developers accordingly for the privilege.
- smoldesu 5y ago
  > Apple is the only maker of premium phones So by your own admission, Apple has a monopoly on the premium market, and is using that power to broker their audience for a premium fee to developers who simply want to sell their code to someone who's willing to pay for it? That is one of the most dystopian arguments I've ever heard, bravo.
  - mrkstu 5y ago
    Is a segment a market? And it is also simply untrue that Apple is the only premium handset maker- plenty of Chinese competition in China and Samsung elsewhere. It is dominant in the segment but it is at best part of a duopoly.
  - leokennis 5y ago
    I’m not sure if it’s a monopoly, but a stronghold for sure. I’m not seeing how Apple’s behavior is any different than that of other players who have a stronghold in their markets though? It’s exactly the same with $10.000 rents in San Francisco or super expensive country clubs where you can mingle/deal with fellow rich people: it’s expensive to get access to a scarce resource. Apple has the scarce resource (people willing to pay for apps) so they charge you a lot of money to access it (30% of your revenue).

shkkmo 5y ago

If Apple's AppStore is really so good, it should be able to withstand a little healthy competition from 3rd party stores. Who knows, a little competition might even inspire the AppStore to become even better?

tshaddox 5y ago
One could argue that this is a bit like saying “if McDonald’s burgers are so good, they should be able to withstand putting competing restaurants’ burgers on their menu.”
- swiley 5y ago
  It's more like saying "if McDonald's burgers are so good they should be able to withstand competing restaurants in the same town." The users buy the phone, not Apple. It's amazing this is even contraversial.
  - tshaddox 5y ago
    I don’t see how an individual iPhone is analogous to an entire town. Is a video game console also analogous to an entire town?
    - swiley 5y ago
      In the analogy you have to buy a house somewhere else if you want to eat anything else. It's really not a complex idea, hopefully that's enough for you.
    - shkkmo 5y ago
      > Is a video game console also analogous to an entire town? Kinda, except that video game consoles, unlike iPhones, usually allow you to play physical media that you can buy from any source (so consoles aren't quite as bad.)
- smoldesu 5y ago
  No, this is more like asking McDonald's not to blow up new restaurants within a week of them coming to town because they didn't "ask permission" from them first.

tobr 5y ago

iPhones are more expensive on average, hence used by people who spend more money on average.

npunt 5y ago

The simple answer is people with more disposable income buy iPhones. Smart of Apple to position themselves this way in the market and build a product good enough to sustain that position, but I don't think that invalidates Marco's argument.

igornadj 5y ago

The comments in this thread are pulling this idea apart, but the fact of the matter is that before the App Store, people were not willing to pay for apps. Apple created the market singlehandedly. How far this extends into the current day is up for debate, and how much rent keeping Apple should be allowed to do, sure, but being dismissive of the instrumental role Apple played in the past and to this day is turning a blind eye.

actuator 5y ago
> but the fact of the matter is that before the App Store, people were not willing to pay for apps. Apple created the market singlehandedly. Umm.. this is some serious revision of the history. - People did pay for apps. I along with plenty of other devs happily paid for Sublime Text while not going through an app store. - There have been app stores that predate 'iOS App Store' like the Steam store, people paid for apps in it as well. It is infact cross platform and competes with other app stores. Apple did not invent app distribution or the concept of paid apps.