Last summer, at their developer events, Apple and Google told us that the previous 12m months, Apple paid $10bn to developers and Google $5bn. Now we learn that Google’s up to a $7bn run-rate. In December, Apple repeated the number – that might mean flat growth, or (I think more likely) that they were just repeating the same number. We don’t (yet) know where Apple’s grown to since then (hint, hint).
If we gross up this new Google number and the most recent Apple number, incidentally, we get to close to $25bn in annual consumer spending on apps.
Google also told us last summer that it had ‘over 1bn’ users of its version of Android (i.e. not counting China, with China also not counted in the revenue numbers). Since at that time my model (and others) estimated that Apple had about 625-650m live iOS devices, that meant that the average iOS device was generating 3x to 4x more app store revenue than the average Android device ($10bn and 625m users versus $5bn and 1bn). We cannot tell from these numbers if that’s changed since then. On one hand, Google has improved monetisation, but on the other, all the new users since then will be on lower incomes with lower propensity to spend, and we know neither the Android user base nor the iOS revenue.
The other point that Sundar makes is that Android is selling a massive range of devices to a massive range of different people, whereas iOS is selling to people who can buy $600 phones. This is true, and it’s inherent in the different models, and both are great models. This is why I’ve said that both Apple and Google have both won the platform wars, for now. Google got reach and Apple got device profits (which Google doesn’t care about) and an ecosystem with sustainable scale. These numbers make it abundantly clear why iOS is not going to lose access to the best apps. But it’s also why Android ARPU is lower (and of course this difference is seen in ecommerce spending and traffic as well, not just spending on apps). If you sell to everyone, well, the average user is going to be different to the average of people who buy $600 devices. Again, that’s fine, and it’s inherent in the model.
One final observation, too: both Google and Apple have smartphone platforms and ecosystems with massive global scale and stable, sustainable dynamics (though the dynamics of the Android OEM space may be another question). That means that working out the horse race between the two is now pretty irrelevant. Again, they both won, so what’s next?