Apple Leads App Stores in Revenue, but Android Is King of Free

Datamation content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.

In some ways, 2011 was the year of the App Store. The Apple App Store for iPhone and Apple App Store for iPad remained the kings of the hill in terms of revenue, but the Google Android Market continued its growth surge and the Amazon Appstore for Android made a strong entrance midway through the year. So just how did the pieces fall and what can it tell us about the year to come?

The Google Android Market grew rapidly in 2011, but both the Apple App Store for iPhone and the Apple App Store for iPad generated significantly more revenue over the course of the year, according to a new report by research firm Distimo. Distimo studied data from the app stores between January 2011 and November 2011.

“Our research revealed that, despite Android’s growing market share, the revenue generated in its app store still lags far behind the revenue generated in the Apple App Store,” said Hendrik Koekkoek, analyst with Distimo. “The Apple App Store for iPad generates more than double the revenue of Google Android Market, while the Apple App Store for iPhone generates nearly four times the revenue of Google Android Market.”

Distimo found the app stores it studied—including the two Apple App Stores, the Google Android Market, the Amazon Appstore, Windows Phone 7 Marketplace, Nokia Ovi Store and BlackBerry App World—offered a combined total of more than 1 million apps (not necessarily unique). All of the app stores, with the exception of the App App Store for iPhone, at least doubled in size over the course of 2011. The Windows Phone 7 Marketplace showed the strongest growth, with 400 percent year-over-year growth.

While Apple remains the 800-pound gorilla in terms of revenue, the Google Android Market surpassed it in terms of free apps in June and never looked back. It was approaching 250,000 free apps at the end of November, whereas the Apple iPhone store was closing in on 200,000 free apps at that time. The Windows Phone 7 Marketplace, which opened its doors in November 2010, also surged ahead in May to overtake BlackBerry App World in terms of the number of free apps offered.

There were also a number of developments in the game space, which is the single largest app category in most of the stores according to Koekkoek.

“Per our July publication, we revealed that the games category for apps is the most robust, and thus the most important,” Koekkoek said. “The games category is the single largest app category in most stores, and also generates the most downloads as well. Therefore, we look specifically at the changes in store sizes in terms of only the games category.”

Currently, Koekkoek said, the largest apps stores for games are the Apple App Store for iPhone (79,077 games), the Google Android Market (46,045 games) and the Apple App Store for iPad (28,683 games). Those three stores retained their relative ranking throughout 2011. But the smaller stores were far less static in terms of games.

“However, looking at the smaller stores, we see some interesting shifts in store sizes,” Koekkoek said. “Windows Phone 7 Marketplace has shown impressive growth in terms of the number of available games. Launched in a limited number of countries in November 2010, it has since surpassed both the Nokia Ovi Store and BlackBerry App World in the number of available games. The Windows Phone 7 Marketplace is now the fourth largest platform for mobile games. Another interesting shift can be seen when looking at the Amazon Appstore: Just five months since its launch, it already features more mobile games than the Nokia Ovi Store and BlackBerry App World. Having had a few exclusive game releases (Angry Birds Rio, Plants vs. Zombies, etc.), the Amazon Appstore will be an interesting store to watch in 2012.”

Part of the changing landscape in all of the app stores is a shift in the way developers monetize their creations. Koekkoek said 2011 saw a significant increase in the number of in-app purchases (IAP) utilized as a successful business model. In the Apple App Store for iPhone alone, the share of revenue of the 200 highest grossing iPhone apps generated by free apps with IAP (also known as freemium apps) increased from 29 percent in January 2011 to a peak of 53 percent in September 2011. It declined somewhat after that to 48 percent in November 2011.

Koekkoek said the freemium model has had even more success in the Google Android Market, where 65 percent of the revenue from the highest grossing apps is generated by freemium apps.

Koekkoek also identified two trends that so far are specific to the Apple App Store that may bear consideration for the coming year.

The first is the “anticipation effect.” While the Apple App Store for iPhone is the largest app store in terms of revenue and remained that way throughout 2011, the number of downloads from the store were in decline for nearly the entire year.

“The lowest point coincided with the moment when the anticipation for the new iPhone was at its height in September,” Koekkoek said. “A rise in downloads occurred immediately following the release of iPhone 4S in October, and the number of downloads in the Apple App Store for iPhone reached its highest peak this year in November 2011.”

Koekkoek said Distimo noted a similar anticipation effect ahead of the launch of the iPad 2.

The other trend has to do with China, where the number of downloads from both the Apple App Store for iPhone and Apple App Store for iPad surged dramatically over the course of the year.

Koekkoek explained China generated only 18 percent of the combined Apple App Store for iPhone downloads from the US and China in January 2011. By November 2011, it generated 30 percent of the combined total downloads of the two countries. Koekkoek said the results for iPad app downloads were even more dramatic. In November 2011, China generated 44 percent of the combined total downloads of the two countries.

As far as the apps themselves go, Koekkoek said Angry Birds was the big winner of 2011, with more downloads across all the stores (except BackBerry App World, which doesn’t offer it) than any other app. Angry Birds Rio and Angry Birds Seasons were fourth and seventh on the list of most downloaded apps, respectively. Facebook, available on all the app stores except the Amazon Appstore, was the second most downloaded app. Skype, available on all the app stores except BlackBerry App World and Windows Phone 7 Marketplace, rounded out the top three.

Thor Olavsrud is a contributor to InternetNews.com, the news service of the IT Business Edge Network, the network for technology professionals.