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TheStreet Open House

Why Developers Prefer Apple Over Google

NEW YORK (TheStreet) --  Google (GOOG) I/O developer's conference may have been the showcase for several new products, but developers prefer Apple (AAPL) iOS platform because of the ability generate revenue from the platform.

Benedict Evans, an analyst with Andressen Horowitz came away from I/O with some interesting facts about Google's Android platform, noting that despite there being more than 1 billion Android users worldwide, developers make less on Android than they do on iOS. Evans notes Google paid developers $5 billion to work on the software platform in 2013, up from $2 billion in the previous year.

Apple shares were trading higher, up 0.63% to $91.47 while Google shares were losing 0.17% to $574.99 in mid-morning trading in New York.

On the other hand, Apple says it paid $7 billion in 2013, with Evans noting it could actually be closer to $10 billion in the past 12 months. Apple's last iOS user count from March 2014 was 470 million.

Evans concludes, "Google Android users in total are spending around half as much on apps on more than twice the user base, and hence app ARPU (Average Revenue Per User) on Android is roughly a quarter of iOS."

Based on reports from developers Evans believes there are five possible reasons for the differences:

  • Android's market share is strongest in relatively lower income countries
  • Many people in those countries lack credit cards and Google has been very slow to offer carrier billing
  • Android phones average $250-$300 where iPhone average $600 - people who choose to spend the extra money are sending a signal about their intents. That is, we don't know what the ARPU for a Galaxy S5 user is, but it's probably very similar to an iPhone user - but Galaxy S5 users are a small minority of Android users
  • Apple offers a distinctly different proposition to Android: perhaps the people who are attracted to that proposition are just more likely to spend money - that is, maybe iPhone users do spend more than GS5 users.
  • Finally, this can become circular: if developers believe that Android users do not pay, then their behavior will be affected - they may offer a free ad-supported app instead of a paid app, or have a lower price. And if they decide not to support Android or support it second, then their users will gravitate to iPhone first, which becomes self-fulfilling. You can see this clearly on Android tablets - magazine apps have low use on Android so are slow to support Android, so users who want magazine apps don't buy Android tablets.
-- Written by Gary Krakow in New York.

To submit a news tip, send an email to tips@thestreet.com.

Gary Krakow is TheStreet's Senior Technology Correspondent.

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