Apple has always generated the highest profits in any industry it has operated in. It commands only a small share of the global smartphone market, but takes away more than half of the total profits, while its competitors struggle to sell inexpensive, low-margin devices.
Apple has been one of the first-movers when it comes to mobile apps, and has over 500,000 apps in the iOS App Store now. It has generated more revenue for its developer base than any other platform, and continues to be more lucrative than Google’s Android for developers. According to a report by Strategy Analytics, Apple generated more than 60% of the total revenue from paid mobile app downloads in 2010, and will continue to generate more than half of the total revenues in 2012 and 2013.
Android will generate more than 20% of the total mobile app download revenue, while other platforms like Windows Phone, Blackberry and Symbian will generate the remainder. The mobile app market is set to explode in the next five years, as the number of smartphones and tablets sold increase, and the virtual goods market expands. Apple and Google are currently positioned to make the most of it.
“The introduction of tablets from Amazon and Barnes and Noble and a renewed push for Windows Phone ensure an intensifying battle for the third horse in the apps ecosystem race. Unlike paid downloads that offer one time payment, virtual goods allow developers to earn recurring revenue from heavily used apps making the business opportunity appealing. Despite the importance of virtual goods, few platforms beyond the leaders have stepped up. Thus, Android and Apple may well dominate into the future,” said Josh Martin, Director of Apps Research at Strategy Analytics