Will we persist with two mobile app ecosystems?

In the Apple App Store and the Google Play Store we currently have two vibrant mobile app ecosystems. Going back a few years the prevailing wisdom was that network effects would ultimately make this a winner takes all markets and that over time users and developers would eventually coalesce on a single platform. That was the lesson we all learned from Windows in the 1990s.

Then more recently people have been saying that both the ecosystems are large enough to be self-sustaining and that Google and Apple have both ‘won’.

That view made sense to me. Both ecosystems were growing and Apple’s dominance at the high end meant that developers mostly built for iOS first giving them sustainability in the face of Android’s faster growth. That’s part of the reason I ditched my long term allegiance to Android and bought an iPhone earlier this year.

Now new data from Apple and Google compiled by Benedict Evans is an early indication that the duopoly might not be stable after all (caveat: this analysis is based on a small number of datapoints and may be subject to large rounding errors).

IOS Growth Slow

The news is that iOS growth looks like it has stopped – Apple App Store revenue has flatlined at $10bn. Meanwhile Google Play Store revenues are continuing to grow fast. Extrapolating the trend lines for the last year suggests that Play Store revenues could overtake App Store Revenues this year.

There are many more Android devices out there and hence the revenue per device is significantly lower on Android, but there too the gap is closing.

For developers gross revenue on the platform and average revenue per device are key numbers and if/when the Play Store passes the App Store on these metrics I expect increasing numbers of developers will choose to go Android first, which will bring users across and further accelerate the growth of Play Store revenues. That in turn will encourage more developers to switch and we may see a repeat of the Windows movie from the 1990s when the winner takes all.

And I will have to switch back to Android.

 

  • http://www.pioneers.london Sierra Choi

    Hi Nic, hope you had a nice weekend. “Flatlining” isn’t actually a bad thing imho, it’s indicative of consolidation, which could either mean a temporary pullback/drop before another upward run or it’s gearing up towards shooting straight into the sky.

    Google otoh, looks like it is in for some volatility. The chart is a 6 month chart however, I find the yearly and daily charts give much more information in regards to specific patterns.

  • Hakim

    Nic, Google won’t be overtaking Apple anytime soon. Google might be catching up, but you can confidently bet on Apple to stay ahead for a while and to keep the more profitable segments in their ecosystem. Even if Google was to significantly increase their app revenues, Apple revenues wouldn’t drop, the pie would just have got bigger. At its current size Apple app market is big enough to keep customers and developers happy.

  • http://www.theequitykicker.com brisbourne

    There’s a chance it might drop if the best developers go to where the most money is, and in 2-3 years that’s Google.

  • Hakim

    Within these timescales I think it’s very unlikely, 5-10 years maybe, but in that timeframe the world might be a very different place in many more ways than in the app space. The investment from consumers and developers in their ecosystem and Apple current trajectory (they are/will the computer on the wrist space). As an example, It took me 6 years to fully be caught by the apple ecosystem. They will need to do something really really wrong for me to move away from it. Does google/Android have the same stickiness? they are miles away from it..

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