Android beats Apple on revenue, but with a catch

2015-04-29 08:45 - Duncan Alfreds
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Apple iPhone. (Duncan Alfreds, Fin24)

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Cape Town - Google's Android operating system has, for the first time, beaten Apple's iOS in terms of revenue generated by downloads, a report says.

A report by Digi-Capital which advises firms on mobile internet, found that Android has finally emerged as a mobile revenue engine, after long being in the shadow of iOS.

But it's not as simple as Android simply out-muscling the iPhone OS. According to the report, the elephant in the room is China.

"Apple and Google took very different approaches to China. Apple embraced China with spectacular success, but Google ultimately exited. Together with China’s inherent strengths and business dynamics, the Chinese app ecosystem now looks fundamentally different to all other markets," the report says.

The result is that when together with the Chinese Android OSes, Baidu, Qihoo 360, Tencent, Wandoujia and others, both Google and Apple look tiny by comparison.

iPhone growth

That may be a reflection of the Chinese internet audience estimated to be 641 million users, or around 45% of the population.

While the picture of Android domination in terms of downloads is well known, in terms of revenue, Apple remains the largest single earner.

"So where iOS generates the most revenue of any one individual app store globally (followed by Google Play and Chinese Android), all Android app stores combined passed iOS revenue at a global level for the first time in 2014. In other words, iOS made less money than Android last year. And that’s a big deal," said Digi-Capital.

But even that picture is not set in stone.

Android has beaten Apple's iOS in terms of revenue. (Digi-Capital)

Apple's iPhone 6 and 6 Plus is surging in China as consumers adopt a larger screen competitor to Samsung's Galaxy Note and S flagships.

That demand saw Apple post strong profits in the last two financial quarters.

Scale

The company posted quarterly revenue of $58bn and quarterly net profit of $13.6bn in the last three months, over a record profit of $74.6bn in the previous period, due mainly to the success of the latest iPhone.

"We're seeing a higher rate of people switching to iPhone than we've experienced in previous cycles, and we're off to an exciting start to the June quarter with the launch of Apple Watch," said Apple CEO Tim Cook of the results.

The surging success of the iPhone in China may yet see Apple overtake Google for revenue globally.

China is the true engine of global apps downloads. (Digi-Capital)

Also, Android apps have to reach greater scale for them to be profitable than iOS apps.

"Apps in China must hit more than eight times the number of downloads on average compared to iOS to make the same amount of money. It is worth noting this analyses Chinese Android versus iOS globally, not iOS in China specifically," Digi-Capital said.

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