You might think mobile-app stores are raining money on Apple [1] AAPL -1.04% [2] and Google [3] , GOOG -0.04% [4] given the hundreds of thousands of apps growing in their “ecosystems.†In reality, sales are much more modest.
Apple and Google rank the “top grossing†apps in the App Store and Google Play stores respectively, but they don’t disclose the dollar figures behind the rankings. Getting a rough idea is possible, however, thanks to streaming-radio service Pandora Media [5] P -2.81% [6] .
Since Apple keeps 30% of App Store sales, it probably didn’t make much more than $3 million from Pandora last quarter.
Pandora’s free-to-download mobile app sells subscriptions to users who don’t want to hear ads. Such sales in the quarter ended in January amounted to $16 million. Of that amount, perhaps 80%, or $12.7 million, was generated via mobile devices, a proportion corresponding to the amount of time users spend on mobile devices instead of PCs. And most of that would have been sold through Apple’s App Store: Pandora only began selling subscriptions directly via its Android app mid-way through the January quarter.
Since Apple keeps 30% of App Store sales, it probably didn’t make much more than $3 million from Pandora last quarterâ€"not a lot, yet good enough for a top-five ranking among the highest grossing non-game iPhone apps world-wide, according to research firm App Annie.
Apple has provided other data that demonstrate App Store sales are modest. In February, Chief Executive Tim Cook told a conference that the total amount paid to developers since the July 2008 opening of the App Store was $8 billion. Apple’s cut before paying that amount to developers would amount to around $3.4 billion, spread over nearly five years. Compare that with the nearly $31 billion generated from iPhone sales just last quarter.
Google doesn’t disclose how much it has paid developers, but the App Store has been around longer and iPhone users tend to be more affluent, says App Annie, so the gross sales at Google Play likely still trail behind.
Apps are clearly less about direct revenue for Apple and Google and more about encouraging lucrative phone sales and paid clicks, respectively. Given that, it isn’t hard to imagine a future where the companies compete to give app developers an even bigger cut of the proceeds.
Links
- ^ Apple (online.wsj.com)
- ^ AAPLÂ -1.04% (online.wsj.com)
- ^ Google (online.wsj.com)
- ^ GOOGÂ -0.04% (online.wsj.com)
- ^ Pandora Media (online.wsj.com)
- ^ PÂ -2.81% (online.wsj.com)
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