Piper Jaffray released a report which states that the total gross Android app sales to date have been only around $340 million while Apple’s total gross app sales have reached almost $5 billion.
Assuming a 30% cut by both companies, this means that Google has paid out a total of around $240 million to developers, while Apple has paid out almost $3.5 billion. This, according to Fortune, means that the total Android app revenue is only 7% of iPhone’s app revenue.
However, those calculations, as correctly pointed out by the guys at InsideMobileApps, are wrong.
Piper Jaffray’s analysis uses metrics which account for only the sales price of the apps. They don’t account for the total revenue earned by Android app developers.
Most Android app developers use an ad-supported model, offering free apps to users and making money by inserting ads within the apps. Only about 1.3% of Android apps are paid, which means that the numbers above don’t account for the most important revenue source for Android app developers – advertising.
In the case of iOS as well, developers monetize free apps using ads, but as 13.5% of all apps are paid, the effect of ignoring ad revenues is not as pronounced as in Android.
Once we adjust the revenue estimates for ad revenues, I doubt that the total Android app revenues will be that low. They will obviously be much lower than total iOS app revenues, but definitely more than 7%.
Piper Jaffray’s estimates also seem to exclude revenues from in-app purchasing, which could further push the ratio in Android’s favour.