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Year of the Android?

Year of the Android? 

android logo

At this point we have a total of 10 apps for iPhone, iPad and iPod Touch, 6 for Google/Android and we have 2 in the Amazon store.  I've been thinking about this a lot:

Will 2013 be the year of the Android?

A question we hear all the time from our users is "What are your plans for Android?"  Each year I keep thinking "This is the year Android makes good".  Each year comes and goes and still the Android market isn't ready yet.  Is 2013 the year?  I don't know, but there are some signs to suggest that maybe it is ... or maybe there never will be a year of the Android and 2013 will be the year that Windows 8 starts making waves.  

Just to be clear: Android phones are selling like crazy, but that's not what this article is about.  I'm focusing here on the market for Android apps, which until now has lagged far behind the iOS market.  Pundits keep telling us that a huge surge of Android App sales is coming ... real soon!  That's great, but as a developer, I'm interested in current conditions, and right now the weather isn't fine on planet Android, at least not in the US.

I imagine that many of the people who are going to read this blog post are die-hard Android fans (as am I) who at this point are beginning to become irate.  Bear with me and read on.  But be warned: you may not like the unvarnished truth from my perspective as a developer about the Android platform!

Let me start by saying that I am an Android user, so I'm not biased against the platform.  In the last 10 years I have used Android, iPhone and Blackberry as my primary phone.  Last year I used an Android (HTC Thunderbolt) phone only.  This year I use an iPhone as my primary phone but also have my Android as my secondary phone.  I tend to use whatever phone I'm focusing on the most from a development standpoint.  There are things I like better about each platform, but overall I like both a lot … and sometimes I even miss the simplicity and ease of use of my old Blackberry!

It's interesting about Android.  Everywhere I look I see signs of a huge market.  There are roughly twice as many Android smartphones out there as there are iPhones and that trend seems to be accelerating.  Samsung sales are through the roof and there are many more Android users than there are iOS users.  

And there are some positive signs from Android users.  For example, users of our BirdLog app for Android enter about 2x as many checklists per person per month as the average iOS user.  That's strange, right?  My theory is that the Android users tend more towards the young, cash-strapped, tech-savvy birders who are out there every day, including a large fraction of the professional biologists.

So … what's the problem?  

Well, there are several:

There are major differences between the iOS and Android user bases in terms of app buying habits, demographics and psychology.  Compared to iOS users, Android users tend to be younger, lower income (mostly because they are younger), more tech-savvy and more price conscious comparison shoppers.  They like apps and they use apps … but they don't like to PAY for apps.  They are much more willing to accept poorer quality and watch ads (which is how Google makes money, after all) than iOS users in order to save money.

In our case, the demographics of our user base don't favor Android.  The Android demographics described above are not the demographics of the typical birder, which is our target niche.   As a point of reference, there is a Facebook page for birding apps (https://www.facebook.com/groups/351866994920401/?fref=ts) that ran a survey and the last time I checked found that about 65-70% of members were on iOS (and virtually none yet for Windows 8).  

Android users buy fewer apps than iOS user ... MANY fewer apps.  Despite a much larger number of devices, the Android market is just 1/4 the size of the iOS App Market (see: http://www.forbes.com/sites/darcytravlos/2012/08/22/five-reasons-why-google-android-versus-apple-ios-market-share-numbers-dont-matter/).  And you can ignore all the hype about the Amazon app store being bigger than Android … it's true, kind of, but those sales are mostly non-app sales like books, movies and music, so they don't help an app developer.   Here's a startling statistic: the global market for apps on iPad alone is bigger than the entire Android app market, including Kindle. 

The bottom line is that we see pretty much what other developers see: about $0.25 of Android sales for every $1.00 of iOS sales.  More importantly that 25% ratio has been steady for the last year, so it is hard to argue that some kind of seismic shift is occurring, at least not in the US.  I hear similar stories from other app developers.   We see no indication that Android app sales are growing faster than Apple, despite faster sales of devices.  Windows 8 mobile app sales, on the other hand, are growing much faster than either Android or iOS, albeit from a very low base.

So far, it seems that the primary path to make real money with an Android app is with high-volume free apps that are supported by ad revenue, perhaps with an up-sell option to make the ads go away.  That approach works fine if you want to produce apps that target the mass market, like sports, games and news, but this model is tough to make work with high-end or niche apps ... which is a big reason why there isn't the richness of high-quality niche apps available for Android that there is for iOS.

crystal-ballSo, what do we plan to do?  

The first thing to remember is that making money on an iOS app is tough.  People throw around the estimate that less than 5% (and some say less than 1%) of iOS app developers make money, and that seems about right to me.  Think about this stat before you consider writing an app: out of every 20 apps that someone writes and publishes in the app store, 19 don't sell enough to earn back the development costs, never mind make money.  The fact that it is even tougher on Android is problematic.

We are lucky to be (just barely) in that top 5%.  In our case the only reason we are in this market in the first place is that we are crazy birders ourselves, so we are willing to lose money or barely scrape by for years in order to do what we love.  (If you are a crazy birder you are welcome to join us!)

Given the facts above, our first priority has to be development for iPhone.  Next comes iPad.  Finally comes Android, although I have doubts that maybe Windows 8 should come before Android given it's growth and appeal to more affluent customers.

The Economics of Developing an Android App

Here is a little more detail on the economics of app development for Android versus iOS.  It makes ugly reading:

1) Porting an app from iOS to Android costs about the same amount as developing an Android app from scratch.  The cost is a bit higher for the same work on an iOS app because there are so many different versions of the Android OS out there, running on so many different devices.  Apple makes things much simpler with a limited number of OS versions and devices to support.  (Note: The so-called platform-independent development environments don't work well enough, which is why they are not widely used, at least not for popular apps.)

2) With the paid app revenue model, one can expect to earn just 20-25% as much revenue as we would for iOS for the same app.  Unless there is a strong back-end of ad or upsell revenue, then you need to expect most Android customers are going to shun paid apps, and most will choose the cheapest option when they do need to pay.

3) Upgrade and maintenance costs are 10-20% higher per unit for Android than for iOS, again because of the wide range of new devices hitting the market every month.  Unlike Apple, Google is much less aggressive about forcing users to upgrade their OS, so there are lots of old OSs out there at the same time that the newest OS keeps changing.  What that means is that our development is harder because we need to build an app that will work on both new and old OSs.  With iOS we pretty much just need to deal with 2 versions of the OS and 3 different screen sizes, and Apple makes that optional by allowing iPhone apps to run on the other form factors.  When a new device or OS comes out, we get about 6 months advance notice.  On Android, by contrast, the form factors and features are all over in terms of screen size, GPS capabilities, slide-out keyboards, etc and apps that display well on one might not work at all on another and change every day.

Here's a hypothetical example of the costs and benefits of creating a complex app, comparable to BirdLog or BirdsEye.  Of course the cost and revenue numbers are made up, but are in line with our experience:

iPhone iPad port Android port
Development cost  $75,000  $15,000  $85,000
Annual revenue  $100,000  $25,000  $25,000
Annual support costs  $15,000  $5,000  $20,000
Server, marketing, upgrades, etc  $20,000 $10,000 $25,000
Contribution (profit before overhead) $65,000  $10,000  $(20,000)

 

So ... What should I do?

1) Android sales are distributed very non-uniformly by country and by niche within countries.  We discussed how Android is under-represented among birders above.  Another example is that Android represents something like 75% of the smartphone market in China, so if you want to launch an app there it better be on an Android platform. The lesson is to pay attentioin to Android penetration and growth in your target market and ignore the overall figures.

2) Making money with apps is hard in general, and harder with Android.  That said, if you can make a strong case for how you will make money from something other than selling apps (freemium, in-app purchases, ads, upsells, subscriptions, cross-marketing, etc), then go for it.

3) Don't assume that porting your iOS app to Android will produce similar results.  You should plan for much lower sales at the same price point, and consider a different revenue model for Android more suited to that market.

Q&A:

Q: Do you plan to continue developing for Android?  I'm not sure.  Economically, I would say no, but we are also driven by our Mission, which is to support bird conservation through the eBird project.  The Android versions of BirdLog really supports that Mission, especially outside of the US.  So, yeah, we will probably continue to develop for Android, but I think I would try to make our Android apps simpler, lower priced and launch them with different revenue models than for iOS.  I'm waiting to see what happens with Windows 8.  If growth looks strong, we may choose to focus there instead or in addition to Android.

Q: What if you spent more on marketing?  A: In our case, the market for serious birders is limited, so spending more to reach it doesn't make sense to me.  For other apps, a large and thoughtful marketing campaign could help a lot.  If you know of smart ways to reach some new market at lower cost that I'm not thinking about, let me know!

Q: How can I help?  A: Well, anything you can do to help us increase our sales, such as telling your friends helps.  If you'd like to make a targeted contribution to help us create an Android version of BirdsEye or add a specific feature to BirdLog that you care about, that would be fantastic.  Another option would be to help us create a version of BirdLog specifically for your area or conservation group.   

Comments welcome: feel free to post on our facebook page: https://www.facebook.com/BirdLog


 

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