Market shares and ecosystem value

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There's lots that was interesting in this year's Google IO, and indeed some of the absences were also interesting (no mention at all of Glass or Plus, for example). 

But we also, for the first time, got some decent numbers. Google Android has 1bn MAUs (not including China or Kindle), and Google paid developers $5bn in the last 12 months, and $2bn in the previous 12 months. 

Apple told us that it paid out $7bn in calendar year 2013 - given the growth trend, it probably paid $10bn in the last 12m. On a trailing 24m basis, there were 470m iOS users in March 2014.

 So, Google Android users in total are spending around half as much on apps on more than twice the user base, and hence app ARPU on Android is roughly a quarter of iOS. 

This is not surprising - it is entirely in line with innumerable reports from developers and publishers. It reflects a mix of several factors: 

  1. Android's market share is strongest in relatively lower income countries
  2. Many people in those countries lack credit cards and Google has been very slow to offer carrier billing
  3. 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
  4. 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.
  5. 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. 

Whatever your view on the relative importance of those factors (and I'm open to suggestions for more), it makes any discussion of market share complex. That is, there are lots of market shares, depending on what you're doing and where you're doing it.  

Notes

There is no way to dedupe tablet and phone devices from users who own both, so I have used phones as a consistent value in the chart above, except that of course there is no way to split this out for ecosystem revenue. I'd prefer it otherwise, but this doesn't affect the validity of the comparison.