Android’s mobile app revenue will reach an estimated $6.8 billion by the end of this year, a near doubling of 2012 revenue. And though this number significantly trails Apple’s app revenue lead, Android is quickly reducing the gap.
That reduction is primarily due to higher sales of smartphones with the Android operating system, which “will ship by a factor of more than three-to-one iPhones” this year, according to a new report by ABI Research. But the most important driver for the increased revenue is the fact that Android is made by Google and makes use of that company’s vast advertising network and analytics platforms.
This is good news for Android, as earlier this year reports concluded that iOS captured 75 percent of all mobile ad spending during the first quarter of 2013. But the increased number of smartphones shipping with Android OS is only part of the story. A big portion of Apple’s dominance comes from the company’s current dominance of the tablet market, which is also being challenged, particularly by the Samsung Galaxy Tab and other tablets running Android that are beginning to gain traction.
However, sales for these devices on both the Android and iOS side will likely ebb and flow throughout the coming months and years. For example, iPhone is expected to see a spike in sales with upgrades to existing models. Nonetheless, there are other factors marketers should pay attention to when it comes to the adoption of a particular operating system.
A big unknown is how consumers will buy apps on phones and tablets. To illustrate, one driver of Apple’s current mobile app revenue share is the fact that many of its customers already have iTunes accounts linked to a credit card that allows them to make puchases easily. However, Google allows direct carrier billing (DCB), which sends purchases to the user’s bill through individual mobile providers. These types of payments are expected to grow as low-cost smartphones sales increase in emerging markets such as America and Asia. Users of these phones are less likely to have a bank account or a debit or credit card.
Although many variables will determine the future of app spending, marketers now have an clear reason to pay closer attention to Android users.
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