Why Android’s ‘cheap and nasty’ strategy is a huge threat to the iOS ecosystem

Tero Kuittinen
Android App Revenue
Android App Revenue

Yes, many Android phones have that tacky, plastic feel. No, Android vendors selling those sub-$200 phones are not making much money. Yes, Android is seriously fragmented. Nevertheless, Google’s strategy of flooding the world with nasty little budget phones is turning out to be a diabolically clever gambit. Consider this: Last October, iOS app revenue was 4x bigger than Google Play app revenue. But in Q2 2013, the iOS market generated only 2.3x more revenue than Google Play. The revenue gap is closing at an astonishing speed.

[More from BGR: HTC has become a total disaster]

Why? Because even though Google Play is obviously an inferior market for mobile apps in many ways, it is swamping the iOS market in sheer volume.

[More from BGR: Dell’s potential savior, a $100 Android computer the size of a USB stick, now shipping to testers]

In the second quarter this year, Google Play passed the iOS market in app download volume by 10%. This surge is powered by emerging markets from Brazil to China. Those cheap $100 Android phones that may not yield any hardware margin are acting as conduits to Android apps for hundreds of millions of consumers who cannot afford an iPhone.

Then, those Android apps in turn yield far lower revenue per user than iOS apps — but very soon, that will not matter much. Because the sheer volume advantage that the Android apps are in the process of building is also going to propel Google Play ahead of iOS in revenue generation by the end of 2014, perhaps sooner.

Mobile app developers are already reconsidering their options. Asian powerhouses in Japan and Korea are shifting to an Android-first product development strategy. American app vendors are starting to launch Android apps simultaneously with iOS apps.

The balance of power is shifting with dizzying speed. If Apple does not change the dynamics, Google Play will be the primary app platform globally by the end of next year.


This article was originally published on BGR.com