The problem facing Android: Users don't want to spend money

The problem facing Android: Users don't want to spend money

Summary: Android has one billion active monthly users, and over the past year it has paid out $5 billion to developers. Sounds good until you realize that iOS users spend four times as much on apps.

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TOPICS: Mobility, Android
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See also: Six clicks: Revolutionary advances in mobile from Android

Data released at Google's annual I/O developer conference offered up two key business numbers that had previously been unknown — the number of monthly active Android users and the cash paid out to app developers.

Android has one billion active monthly users (excluding China and Kindle users), and over the past year it has paid out $5 billion to developers. Andreessen Horowitz’ Benedict Evans took this data and crunched some numbers.

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 [average revenue per user] on Android is roughly a quarter of iOS.

Horowitz offers up a number of suggestions as to why this disparity might exist.

  • Android is dominant in low-income countries.
  • Users don't have credit cards and Google has been slow to adopt carrier billing.
  • Android handsets are cheaper than iPhones, and so people who are willing spend more choose iPhone.
  • Apple is offering something that users want and as a result are willing to spend more.
  • Developers are attracted to iOS because of increased revenue, and this means there's less for Android users to spend money on.

The bottom line is that Android users aren't as loose with the dollars as Apple users are. And this is a problem for Android as it tries to expand into new areas such as wearables and home automation.

Not only is it going to be difficult selling high-end devices to Android users — premium devices such as the Galaxy S5 are in the minority — but it's going to be hard to encourage developers to create compelling apps for a new generation of devices that are going to have limited appeal.

Android positioned itself as a lower-cost alternative to iOS, and it seems that this is something that users have picked up and run with, and it's going to be a problem for the platform as it tries to expand into new — and more expensive — areas.

Topics: Mobility, Android

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122 comments
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  • Wrong: Apps are routinely free. It's not people are against buying them.

    Mobile apps are so cheap people would buy them.

    Most Android users aren't to different from iPhone users. They just picked a different platform, possibly because the phone/tariff was less.
    bradavon
    • Actually, free apps was my incentive

      When I switched to Android, free apps was my incentive, there are much more free apps on Android than on iOS. I don't mind seeing a little ad here and there if it means the app is free.

      I think Apple and Microsoft have some rules about in-app ads which make them less interesting for developers which explains why less apps are "ads paid" on these platforms.

      I really wish I could get Angry Birds for free on Windows 8, but it's not, so I keep on playing on my Nexus 7.

      Also, it might sound paranoid, but I'll never let Google know my credit card number, but I don't really fear that from Microsoft (I wouldn't approach an Apple device even if all was free about it).
      lepoete73
      • @lepoete73

        You are the perfect example of the average Android user, and why the facts are what they are.

        Free apps were your incentive to take the Android route.
        You don't mind seeing ads as long as you don't have to part with $1 or $2 - pocket change.
        You don't play Angry birds on Windows 8 because you'd have to part with a couple dollars.

        The amount spent on apps is the least significant expense for nearly all but very young children, and yet you make it your top consideration. smh
        dwkmi
        • Another thing

          And this is the same for all devices: when I buy (I mean pay money for) I want to be able to use it forever, which is far from a guarantee with apps from app stores. What if they remove the app in a few months, I won't be able to install it on my new device even though I paid for it.

          That's one of the biggest drawback from all mobile platforms. If I pay for it, I want either a physical support for what I bought or at least a downloadable installer which will let me use it even if it is removed from the app store. Until then, app stores won't get my money!
          lepoete73
          • Not true:

            "What if they remove the app in a few months, I won't be able to install it on my new device even though I paid for it."

            I have both iOS and OS X apps that are no longer supported (no longer on the App Store) but I get the last version I installed when I restore a device.

            I don't know if Android and WP are the same.
            Bruizer
      • Rather have ads get in your way rather than spend a dollar?

        You rather see ads on Andrybirds rather than spend a dollar, on the game? This is why Android is where it's at when compared to iOS few devices. Developers rather go where users are willing to spend $$. I think if Andry birds was a penny you probably still wouldn't buy.
        dave95.
      • Avid iPhone user...

        I prefer interfaces uncluttered by rotating/blinking/floating/space-hogging ads. I'm willing to pay a small amount to have my frequently used apps ad-free. I get so tired of accidentally clicking an ad and being yanked out of the app. There are plenty of free apps out there on iOS for those who want them. I prefer quality and in that regard, you typically get what you pay for.
        autigers1970
        • I prefer android because it does more.

          My Nexus tablet (one tablet) , points or more telescopes, it focuses and post process images (realmtime deconvolution) in real time and provides an excellent experience.

          Some of the software is developed by my self and have bought some other stipulations that allow me to do more.

          To accomplish the same tasks with IOs, i would need five devices per telescope and thousands of dollars in applications. None that come close to what can be done with Android.

          Just imagine the cost and time to deploy one of my apps to an IOs device. It wet uphold have taken five years longer to get where I'm at and considerable more expense. Once all the patents are in place, it will be released for Android though never for IOs, though patents will be on place for both.
          Uralbas
        • Avid Android user...

          I, too, am willing to pay a small amount to have my frequently used apps ad-free.

          I am glad Android gives me the power to decide what app is "useful", and therefore, worth paying for.
          anothercanuck
        • See you THINK your clicking that ad by mistake

          See you THINK your clicking that ad by mistake when in fact the ad was engineered to be clicked. you had no choice but to click it.
          Stan920
      • Don't trust Google? Buy from Amazon.

        Many of the same apps for Android are available on Amazon too. Another advantage of buying from Amazon is that they actually test apps on various devices, which I don't believe that Google does.
        nfordzdn
      • That's funny, and odd.

        "but I'll never let Google know my credit card number, but I don't really fear that from Microsoft"

        Its odd, because in every country where credit cards are used, all retailers must adhere to that's country's laws concerning what you can and can't do with a person's credit card info.

        In other words, both Google and Microsoft must comply with the laws of the land, reguardless of what land you live in.

        If you have evidence that Google is breaking the law somewhere, you should notify the authorities.
        anothercanuck
    • You are wrong

      There have been several articles describing the monetization of apps, and Apple is a better platform to make money. This has been true for years, and nothing has changed.

      Android's appeal is that it is cheap. We are seeing a divide. If you look at the high end phones like the Galaxy 5, their market share is well below the Apple phones. The majority of Android users are folks looking for inexpensive smart phones, and they don't want to pay for apps.
      Christopher Weiss
      • Apple doesn't make high end smarthones

        They make expensive featurephones, but that's not quite the same thing. Apple products Veblen goods. Worse in nearly every way than their competitors, but more valuable because Apple charges more for them. Android phones have removable batteries, SD cards, high resolution screens, NFC, multitasking, widgets, side-loading (which, to my mind, is central to what makes them smart vs. feature), etc. There is almost nothing you can do on an iPhone that you can't do on an Android phone, but the opposite is not true.

        In the PC space, Windows devices have touchscreens and handwriting recognition, voice recognition/control, and come in configurations including tablets (from 8" to multiple feet!). They can even run in embedded mode to power cash registers and ATM machines.

        That said, people pay a premium for inferior Apple goods. Fools and they're money are soon separated. That's all we are seeing with Apple.
        x I'm tc
        • I know this may come as a shock to your ego

          but just because someone values something different than you does not make them a fool.
          baggins_z
          • It doesn't hurt my ego

            I don't use an Android phone or an iPhone, so I'm pretty platform agnostic. I'm just an observer. And I have no desire to criticize others for their preferences. That said, I strongly suspect most people who buy iPhones do so without recognizing what the tradeoffs actually are.

            People like Gucci handbags and Rolex watches. There's nothing wrong with that. But if you somehow come to believe that you can carry more stuff or get to more meetings on time because of those choices, then you're a fool.

            iPhones are luxury items that are objectively technologically inferior to their primary competition, but sell for much higher asking prices. Apple has been very good at getting people not to recognize this straightforward fact. This is such a storied phenomenon that there is widespread recognition that Apple creates a "reality distortion field."

            If you buy an iPhone and think you are getting more bang for your buck, you're wrong -- and therefore foolish.
            x I'm tc
          • Get over yourself

            You presume to decide for other people what 'bang' they should be looking for when spending their bucks. You then term the superiority of your particular selections an "objective fact."

            No, it's a subjective fact, true for you but hardly universal. You value SD cards on a phone. That's nice; buy a phone with an SD card slot. But don't presume to tell the next guy -- who might prefer to use cloud storage -- that your storage preference is "objectively" superior.

            A similar "widespread recognition" is that some people think that editing fstab on their phone is a fun experience. Such people always look down on Apple users, because they can't hack at fstab. Let me buy you a vowel: they don't want to. It's not fun for them. They thank Apple for hiding all that stuff from them. Some of those people have a net worth in the hundreds of millions of dollars, so get over the idea that they're all idiots. They just have different interests than you.
            Robert Hahn
          • Amen to that

            Couldn't have said it better myself. Just because someone doesn't like iOS devices does not make them inferior products. They're still capable of doing everything 99% of users want them to do. If iPhones were so inferior, Apple would not be one of the most valuable companies on earth.
            ABR2195
          • Brand... name... recognition...

            Lets not pretend that some products sell well because of their brand name and not as a result of their quality. Beats audio is a great example of that. $14 to manufacture and $300 to purchase. Marketing can do things that quality products cannot.

            iPhones are fine phones, but it is a factual statement when people say that there is almost nothing an iPhone can do that competing phones cannot, but there are tons of things competing phone can do that iPhones cannot.

            At the most basic level, iPhones cost more and do less. So when someone makes a statement that iPhones are the best phones being made, there doesn't seem to be much evidence to support that.

            Had they said, I like the iPhone more than other phones, fine, but that wasn't what was being said.
            Emacho
          • ......

            "objectively technologically inferior to their primary competition" let me correct that for you "Subjectively technologically inferior to their primary competition."
            Meansman