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Xiaomi: The Apple (… and Netflix) of China

  
  
  

While most of the tech media has congregated outside the Moscone Center in San Francisco waiting for the new Apple tablet, Kara Swisher of All Things D is across the street at the GMIC conference interviewing Lei Jun, the CEO of Xiaomi. Mr. Jun has plenty to talk about. Xiaomi’s newest flagship smartphone the Mi-3 sold 100,000 units in less than 86 seconds and the first batch of its flat panel TVs all sold in less than 2 minutes. Not even Apple can boast of such velocity driven by legions of devoted fans.

The Rise of Xiaomi as a Serious Smartphone Player

Since its first smartphone launch in August 2011, Xiaomi has been on a growth tear in its native China. Based on devices tracked by Flurry, Xiaomi’s installed base of phones has quadrupled since the third quarter last year. In a previous research report, Flurry reported that Xiaomi has become a serious challenger in the smartphone market capturing over 6% of the Chinese market, which is the largest smartphone market in the world. This is more than the market share of HTC and Lenovo and it happened in less than two years.

xiaomi intalled based

Media and Entertainment: Xiaomi’s Entry Point to the Market

While consumers rave about Xiaomi’s slick design and performance, it is the company’s software and content strategy that is fueling its growth. Its early focus on mobile content has given it a clear differentiation from other device manufacturers. In addition, its focus on a closed ecosystem has allowed it to focus more on the consumer experience and allowed it to attract a legion of “fan boys” that snap up whatever device the company makes. Xiaomi’s largest critics believe that a closed ecosystem is hard to pull off. This is especially true in China where Tencent is well-entrenched in social networking and gaming and Alibaba has a strong position in e-commerce. However it seems that Xiaomi has found its “killer app” outside of social and commerce and is staking its claim.

To get better insight into that killer app, Flurry looked at the app categories where Xiaomi users spend the most time. While gaming still dominates, it was interesting to see that Xiaomi users spent significantly more time in Media and Entertainment apps than Samsung or Apple users. Compared to iPhone users, Xiaomi customers spend five times as much time in Media and Entertainment aps. While the definition of what goes into Media and Entertainment apps is broad, think of it as content that consumed in the living room and in movie theaters (or the small and big screens.)

xiaomi users spend the most time

Could this simply be a sign of a shift in content consumed on mobile devices, or a clever focus on behalf of Xiaomi? Earlier in the year, Flurry released the below data, showing that Media and Entertainment was the second fastest growing category in mobile, growing much faster than gaming and slightly behind social networking. 

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So the growth of Media and Entertainment apps is a worldwide phenomenon, but it appears that Xiaomi has claimed its stake in that market segment very strategically and successfully. Taking a page from history, Blackberry used email as its entry point into the smartphone market, unseating Nokia. Then Apple came along and used Music and iTunes (and its access to people’s credit cards) as its entry point into market, unseating Blackberry.

With Media and Entertainment as its entry point and successful entry into the flat panel TV market place (besting Apple), it appears that Xiaomi has taken a page out of Netflix’s playbook to beat the competition at the content game. Granted, today it is “just” China, but Xiaomi is not stopping at its home market. Its latest hire indicates that the company’s ambitions are way beyond the Chinese borders. While its CEO is known to dress like Steve Jobs, it is Netflix’s Reed Hastings, whose long-term focus is on cutting the cable cord and “owning” a good portion of the Media and Entertainment industry, that Mr. Jun needs to be compared to.

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The Post-PC Era: Is the U.S. losing its grip on the software industry?

  
  
  

Just five years ago, PCs reigned supreme and so did the US software industry. In 2008, U.S. companies produced an estimated 65% of all PC software units sold on a worldwide basis.

In only half a decade, smartphones, tablets, and perhaps most importantly, apps, have changed the nature of the software industry. In this post we look at where apps are being developed and used and discuss the implications of that for the Post-PC Era software industry.

More Apps Are Now Being Created Outside The U.S. Than Inside The U.S.

Let’s start by considering where apps are being produced. The chart below shows the percentage of the apps that were recording data through Flurry Analytics as of the start of June in a given year broken down by whether they were created in the US or in another country. As shown in that chart, even in 2011, only a minority of apps were created in the US. By June of this year only 36% of the apps we measure were made in the U.S.A.

FLR130801 Post PC Era 1 resized 600

U.S. Made Apps Still Dominate App Engagement, But Their Share Is Slipping

Of course, some apps enjoy much greater use than others, so we next considered how the picture changes if apps are weighted by total time, which takes into account both user numbers and engagement. Once time is taken into account, things look considerably better for the U.S., suggesting that, on average, user numbers or engagement are greater for apps made in the U.S. than for apps created elsewhere. That makes sense given the size of the U.S. population, the fact that it was an app pioneer country, and the number of English speakers in other countries who might be able to use U.S.-made apps without any localization. Nonetheless, even the weighted percentage of apps made in the U.S.A. has dropped in the past year.

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Use of Local Apps Is Strong In China

This should not lull U.S. app developers into a false sense of security however. That becomes evident from examining where the apps used by people in particular countries are made. That’s what the chart below does, starting with the United States. Nearly sixty percent (59%) of the time U.S. users spend in apps is spent in apps developed domestically, meaning that more than 40% of the app time of U.S. consumers is already spent in apps developed in other countries.

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And while U.S. made apps are used elsewhere, unsurprisingly, people in many other countries spend a significant amount of their app time in apps developed in their home countries. For example, 13% of the time spent in apps in the UK is spent in apps made in the UK and 8% of the time spent in apps in Brazil is spent in apps made in Brazil. But as is so often the case, it’s China where things get really interesting. Nearly two-thirds of the time spent in apps in China is spent in apps made in China. U.S. made apps only account for 16% of total time spent in apps in China. The size and growth rate of the Chinese app market imply that the worldwide share of time spent in apps that are produced in the U.S. can be expected to contract further.

Translating apps and adapting apps to make them culturally appropriate is necessary in a country such as China to get most people to download and use most apps made elsewhere. Until recently, rapid growth in countries that didn’t require that type of effort meant that many developers based in the United States probably didn’t want to bother. With growth in the smartphone, tablet, and app markets in countries such as the U.S. slowing and a lot of remaining room for growth in countries such as China, some developers may now be reconsidering that position. It will be interesting to see if many can successfully adapt their apps for world markets.

While many U.S. app developers are just starting to think about globalizing their apps, it has been a near necessity for developers in some other countries from the beginning. Consider the situation facing a developer in a small country where the local language is not one of the world’s dominant languages. Unless they create an app with global appeal (e.g., a flashlight app), or that can be adapted to local markets relatively easily (e.g., translation of a weather app), they are likely to end up with very few users. That is a problem since the time required to develop an app for a small number of users is no different from that required to develop an app used by a large number of people.

App Developers In Other Countries Have A Head Start Globalizing

Creating global or localizable apps turns that problem into an opportunity. The chart below suggests that developers in countries such as Finland, Denmark, Bulgaria, and Slovenia are taking advantage of that opportunity. The numbers in the chart reflect the impact of app developers in a given country by taking the total percentage of time users worldwide spend in apps developed in that country and dividing it by the total percentage of apps developed in that country. Note that this is equivalent to taking the 2013 percentages in the second set of charts in this post and dividing them by the 2013 percentages in the first set of charts. For example, 70%/36% = an impact of 1.9 for the US. A metric of one or greater indicates that, on average, apps developed in a given country command a disproportionate share of time. The bigger the number, the greater the impact of apps developed in that country.

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Given the dominance of English, the tendency of U.S. cultural products to spread internationally, and the fact that much of the app economy developed in the U.S., it’s not surprising that the metric for the U.S. is greater than one. China’s large population and the difficulties developers outside of China face developing for that market also make its high impact somewhat expected. What’s much more interesting is that the other five countries that have an impact metric of one or greater are all small, and four of the five speak relatively rare languages.

Globalization Of The App Industry Can Be Expected To Continue

This, and the low cost of app development imply that the app part of the software industry has the potential to become truly global.  For example, as of June of this year, developers in twenty-three countries contributed at least 1000 apps to the more than 350,000 apps Flurry measures worldwide.

There are already examples of worldwide app hits that were developed outside the United States. For example, Angry Birds was developed by Finland based Rovio and has become a worldwide success with hundreds of millions of downloads. The same applies to Cut the Rope, which was developed by Russia-based Zepto Labs and Fruit Ninja which was developed by Australia-based Half Brick Studios.

Three key factors suggest that the markets for apps and app development will become increasingly global.

First, the App Store and Google Play take a lot of friction taken out of software distribution in the app world.

Second, the market is already very large and growing quickly in many parts of the world. In July of 2013, Flurry tracked 1.15 Billion monthly active devices. As our results have shown, there is still some ‘home field advantage’ for local developers, but in theory developers anywhere can create apps for users anywhere.

Third, the cost of development is still relatively inexpensive, especially if you factor in the average salary of software engineers in countries like the Philippines, The Ukraine, and Brazil. The cost of promotion is rising, but total costs are still a fraction of the cost of development, packaging, distribution, and marketing packaged PC software.

In short, geography is becoming increasingly irrelevant in the Post-PC Era.

China Report: Device and App Trends in the #1 Mobile Market

  
  
  

Smartphones and tablets have gone from being the latest gadgets for relatively affluent people in relatively affluent countries to ubiquitous devices in mainstream use in many countries around the world. In fact, as we reported in February of this year China surpassed the US to become the country with the largest installed base of connected devices as measured by Flurry Analytics. As we also reported, a second wave of countries around the world is now experiencing the type of growth mobile pioneer countries experienced previously. For example, the mobile markets in the BRIC countries are now all growing faster than the mobile markets in the U.S., U.K., and South Korea. 

Knowing that the landscape is constantly shifting, we are beginning a series of blog posts reporting on the use of smartphones, tablets, and apps in particular countries and geographic regions around the world. Given China’s world-leading installed base and considering the China Joy conference (China’s largest digital conference) is this week we thought we would begin there.

In June of this year Flurry Analytics measured 261,333,271 active smartphones and tablets in China. That represented a whopping 24% of the entire worldwide connected device installed base measured by Flurry. The chart below documents the growth in the installed base. The left axis and blue line show China’s growth over the years. The right axis and red line show growth in the world as a whole (including China) a basis of comparison. As can be seen from the gap between the two lines growing through 2010 and much of 2011, growth in smartphones and tablets in China lagged the world as a whole through that period. But starting toward the end of 2011, the installed base in China began a period of exponential growth. During this period it surpassed the growth rate for the world as a whole, as shown by the blue line catching the red line in the graph. We expect China to maintain its leadership (in terms of active installed base) for the foreseeable future because device penetration rate is still relatively low and much opportunity remains, as we reported in a previous post.

FLR130702 large installed base V3 300dpi resized 600

Xiaomi Is A Local Manufacturer To Watch

Examining a random sample of 18,310 of the devices in our system in China that run iOS or Android apps revealed that Apple and Samsung are the top two device manufacturers, as they are most everywhere. China’s own Xiaomi was a strong third, with a 6% share of the market, ahead of HTC, Lenovo and a multitude of others. As we noted in a previous post, Xiaomi has been successful in accumulating a large number of active users for each device model it releases. Worldwide, only Apple, Amazon, and Samsung have more active users for each device model released.

FLR130702 iOS and Android installations  300dpi resized 600 v2 resized 600

It will be interesting to see if Xiaomi can continue to gain share in China – possibly by mopping up share from smaller manufacturers of Android devices – and also if they can begin making gains in other markets outside of China to become more of a global player. With rumors of a Xiaomi tablet circulating, we will also be watching to see if their entry into the tablet market will increase the use of Android tablets in China. Currently 21% of the iOS devices in our randomly drawn sample were tablets compared to only 4% of the Android devices.

Chinese Users Over Index in Reading, Utility, Productivity

In looking at how Chinese people use their connected devices we see similarities and differences compared to the rest of the world. As a general rule worldwide, games dominate time spent in apps measured by Flurry Analytics, and China is no exception. On average, Chinese owners of iOS devices spent 47% of their app in games. The percentage of app time devoted to games was even greater for Android at 56%.

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Smartphones and tablets are not just about fun and games in China. Compared to iOS device owners elsewhere, the average time Chinese owners spend using Books, Newsstand, Utility, and Productivity apps is greater than the rest of the world (1.8x, 1.7x, 2.3x, and 2.1x respectively). On average Chinese owners of Android devices spend more than seven times as much time in Finance apps (7.4x) than Android owners elsewhere spend in Finance apps, but they also spend more time in Entertainment apps (1.7x).

FLR130702 Rest of World resized 600

Will China’s Exponential Growth Change The Device And App Markets?

It will be interesting to see how China now having leadership in terms of its installed base will impact the device and app markets elsewhere. Given Xiaomi’s success at building a large number of users for each model it releases, it might try to add further scale by expanding internationally – particularly to the other rapidly-growing BRIC markets where brand preferences are not already well-entrenched.

Within China itself, Chinese competitors may have an even greater advantage in the app market since cultural influences and differences are likely to be even more important in the app market than in the device market. There are already strong Chinese app companies such as Baidu and Tencent and clusters of app developers emerging in places like Chengdu. At first they are likely to concentrate on apps for the large local market, but that may eventually lead to growing app exports. For example, the fact that Chinese consumers over-index on some more work and educational-oriented apps may encourage Chinese developers to focus on those areas and innovate, and that could lead to creation of apps that end up being adopted elsewhere in the world. We’re looking forward to discovering what app is to China what Angry Birds was to Finland

India, China, and the Map to Two Billion Connected Devices

  
  
  

Flurry measured a 47% increase in active smartphones and tablets in the United States between April of 2012 and April of 2013. While that number sounds impressive, it actually puts the U.S. in the bottom 5% of countries for connected device growth in the past year. Worldwide, growth of these devices is exploding. To be in the top 5% of countries for growth over the past year, a country’s number of active connected devices needed to more than triple.

There are currently more than one billion active smartphones and tablets globally, and based on current growth rates we expect to reach two billion in 2014. In this report we discuss which countries are growing fastest, and the implications for the mobile ecosystem and for society more generally.

Huge Potential for Future Growth

The reason even 47% growth puts the US near the bottom of countries for tablet and smartphone growth becomes clear from comparing the size of the connected device installed base and population in five countries.

Let’s start by considering China and the U.S. These two countries currently have a similarly sized connected device installed base, but China has more than four times as many people.Combine China’s largely untapped population with its rapidly growing incomes (increasing at a rate of 8-10% a year between 2009 and 2011, according to the World Bank), and it’s not surprising that the connected device installed base in China grew by 149% between April of 2012 and April of 2013.

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We expect these same forces to continue fueling growth in connected device numbers in China, and given the size of the Chinese population, those numbers could add up quickly. For example, if penetration of smartphones and tablets in China grew to that of Malaysia then 210,507,168 additional connected devices would be added to China’s installed base. We chose Malaysia as a point of comparison because it has a large Chinese population and per capita incomes where China’s are likely to be in the not too distant future.

Canada and India provide an even more dramatic comparison. They currently have similarly sized installed bases of smartphones and tablets, but India’s population is 36 times as big as Canada’s. Of course, India’s device penetration won’t catch up to Canada’s overnight, but when India’s rate of penetration equals the current rate in China, then 197,561,626 additional devices will be added to the worldwide installed base. Given India’s connected device installed base grew by 160% in the past year, we don’t think that’s going to take that long to happen.

For those keeping count, that means that the world’s number of connected devices will increase by more than 400 million (or about 40%) when the rate of penetration in India reaches the current rate of penetration in China, and the rate of penetration in China reaches the current rate of penetration in Malaysia.

100%+ Growth is the New Normal

India and China’s large populations make them dramatic examples, but their rates of growth don’t even put them at the top of the charts.Use of smartphones and tablets grew in every country in the world last year except for the three (The Central African Republic, Niger, and South Korea) shown in red in the map below. South Korea was one of the earliest adopters of mobile technology, and it appears that its market is now saturated. The countries in orange (mainly the English speaking countries, Western European countries, and the most connected parts of Asia) are other early adopters of mobile technology. Those markets still grew at rates of up to 99%, but a lot of that growth was the result of people adopting tablets as second devices.

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The countries in yellow and green all saw their mobile installed bases more than double in the one year period between April of 2012 and April of 2013.That phenomenal rate of growth is all the more impressive considering what a large proportion of the world’s land mass and population those countries represent. The mobile markets of all of the large BRIC countries (Brazil, Russia, India, China) grew by between 100 and 199% (the growth rate for the yellow countries on the map). Much of the rest of South America and parts of Africa also grew at that same rate.

The number of active connected devices in countries in green in the map grew at 200% or more in the year to April 2013; those shown in the darker green had growth of 300% or more. Many of these hyper-growth countries are relatively small and not particularly affluent, so their fast growth in the past year may be a reflection of their wireless infrastructure catching up enough to allow their citizens to participate in the mobile revolution.

Implications for the Mobile Ecosystem

The discussion up to now clearly points to rapid growth in the connected device installed base coming predominantly from countries that have a lot of headroom for growth because their current rate of penetration is relatively low. That has the potential to change the foundation of the mobile ecosystem. We have become used to a world in which connected devices are reasonably expensive and replaced fairly frequently, and in which apps for those devices are developed by people in relatively affluent countries. As we look toward the connected device installed base doubling to more than two billion, we expect more of a focus on lower-cost devices that are also possibly more robust (to allow for less frequent replacement since that may be unaffordable in lower income countries). We also expect to see greater diversity of apps and app developers as apps are developed to meet the needs of increasingly diverse device users.

Things get even more interesting when we consider what people might be doing with all of those devices. Of course, they will still provide communication and entertainment, but we expect mobile devices to play an increasingly large role in many aspects of life including enabling commerce in growing economies, facilitating medical care in remote areas, and ensuring that people throughout the world have access to world-class educational resources. We can’t wait to see what else the next billion smartphones and tablets will be used for!

China Knocks Off U.S. to Become World's Top Smart Device Market

  
  
  

Just days into the Chinese New Year (Year of the “Snake” for anyone keeping track), China has passed the U.S. to become the world’s top country for active Android and iOS smartphones and tablets. This historic milestone takes place a year after Flurry first reported that China had become the world’s fastest growing smart device market. Since then, it took China’s rapidly growing middle class just twelve months to close the gap on the U.S.

For this report, Flurry uses its entire data set, tracking more than 2.4 billion anonymous, aggregated application sessions per day across more than 275,000 applications around the world. Flurry estimates that it reliably measures activity across more than 90% of the world’s smart devices.

SmartDevice InstalledBase China vs US Feb2013 resized 600

Reviewing the chart shows that China and the U.S. had roughly the same active smart device installed base in January 2013, 222 million in the U.S. versus 221 million in China. We use a model to project the final February 2013 installed base for each country based on historical growth trends as well as the number detected devices per country through the first half of February. Flurry estimates that by the end of February 2013, China will have 246 million devices compared to 230 million in the U.S.

We also conclude that the U.S. will not take back the lead from China, given the vast difference in population per country. China has over 1.3 billion people while the U.S. has just over 310 million. Considering that the U.S. has the world's 3rd largest population, the only other country that could feasibly overtake China sometime in the future is India, with a population of just over 1.2 billion. However, with only 19 million active smart devices in India, China will not likely see competition from India for many years.  Below, we show the top 12 countries by active iOS and Android installed base through the end of January 2013.

SmartDevice InstalledBase Jan2013 resized 600

The chart shows that the U.S. and China each have more than five times the active installed base than that of the U.K., the world’s third largest market. Additionally, both China and the U.S. continue to see rapid device adoption. Year-over-year, compared to January 2012, the U.S. added 55 million new devices. However, in that same time, China added a staggering 150 million new devices. With its growth rate, China would have passed the U.S. earlier, except for the U.S.’s massive holiday season, which enabled the U.S. to hold off China for an additional two months.

SmartDevice GrowthRates Jan2013 resized 600

The final chart in our analysis shows growth in the number of active smart devices per country, between January 2012 and January 2013. While China no longer leads the world in growth, it still commanded an impressive 209% rate of growth on top of a base of 71 million devices from January 2012. For this chart, Flurry selected countries that had a minimum of half a million devices as of January 2012. Countries that grew faster than China over the last year were Colombia, Vietnam, Turkey, Ukraine and Egypt. While the four BRIC countries are not all among the top 12 countries in terms of percentage growth (specifically, Brazil and Russia are not top 12 "growers"), all four are among the top 12 when calculating the number of net active devices added per market (i.e., Brazil +11.5 million, Russia +12.0 million, India +12.4 million, China +149.5 million).

In this new era of mobile computing, sparked by a confluence of powerful innovation across microprocessors, cloud storage and network speeds, Apple and Google have helped create the fastest adopted technology revolution in history, 10X faster than that of the PC Revolution and 3X that of the Internet Boom. And now, as the largest and fastest modernizing country in the world, Chinese consumers lead that revolution.

China Now Leads the World in New iOS and Android Device Activations

  
  
  

Flurry recently quantified China’s meteoric adoption of iOS and Android applications.  While China ranked 10th in application sessions at the beginning of 2011, it finished the year in 2nd place, only behind the United States.  With its large population and rapidly emerging middle class, adoption of apps vaulted China into the position of world’s 2nd largest app economy.  In additional analysis, Flurry also determined that China has the most market upside, based on calculating those in China who can afford smartphones versus the current installed base.

This report reveals that, for the first time ever, China now leads in new smart device adoption (iOS and Android smartphones and tablets).  We also update app usage velocity trends for China and the rest of the world, since first studying this late last year.  For this report, Flurry used its entire data set, tracking more than 1 billion anonymous, aggregated application sessions per day.  More than 60,000 companies use Flurry Analytics across more than 160,000 applications.

China's Growth Spurt

Let’s start with a look at the fastest growing countries, as measured by app session growth.

App Session Growth by Country Q1 2011 v Q1 2012 

Comparing Q1 of 2011 versus Q1 2012, the chart above shows the ten fastest growing countries in terms of app sessions.  A session is the launch and use of an application. For example, a consumer who opens a news application and then spends two minutes reading various articles counts as one session.  Starting on the left, China leads the world in app session growth, with an enormous growth rate of more than 1100% between Q1 2011 and Q1 2012. China’s growth rate is particularly staggering given that it was already the world’s 7th largest country in terms of app sessions by the end of Q1 2011.  This speaks to the country’s sheer population as well as increasing affluence among a meaningful part of its population.  Please note that we project the last ten days of Q1 2012.

Building an App? Go East, Young Man! 

We next study new device activations between China and the U.S., with amazing results.

iOS and Android New Device Activations China vs US 2011 vs 2012

The above chart shows new iOS and Android device activations per month in the U.S. and China for the last 15 months, from January 2011 through March 2012.  In January 2011, the U.S. accounted for 28% of the world’s total iOS and Android device activations, while China accounted for 8%.  In February, Flurry calculated that China surpassed the United States in monthly new iOS and Android device activations for the first time in history.  China is now the world’s fastest growing smart device market.  For March, we project that China will account for 24% of all iOS and Android device activations, while the U.S. will account for 21%.  Again, please note that we project the several days of March to round out Q1 2012.     

With China now activating more devices per month than the U.S., this means that the gap is closing between the two countries in terms of installed base.  Not only is China already the second largest app economy, but also could eventually overtake the U.S. as the country with the largest installed base of smart device users.  We estimate that the U.S., a more mature market, currently has more than twice as many active devices than China.  However, China, a faster growing, emerging market, already has twice as large an installed base as the next largest market, the UK.

Apps Without Borders

In this last chart, Flurry looks at the shift in application usage across the world.

iOS and Android App Session Usage Top Countries vs Rest of World 

The chart above compares mobile app sessions tracked by Flurry Analytics in Q1 2011 versus Q1 2012.  The green area shows the percent of app sessions occurring in the United States, the leading mobile app market.  While the absolute number of sessions in the U.S. has more than doubled between Q1 2011 and Q1 2012, its share of total sessions has declined from 56% to 46%.  In other words, while the U.S. app market is growing rapidly, the rest of the world is growing even faster.  Looking at the balance of the top 10 countries (ranks 2 – 10: China, UK, South Korea, France, Australia, Canada, Japan, Germany and Spain), this group has increased in collective sessions by 3.4 times between Q1 2011 and Q1 2012, resulting in an increase in total session-share from 27% to 30%.  Further, the rest of the world (another 217 countries across which Flurry tracks user sessions), has grown by more than 4 times, increasing in session-share from 17% to 24%.  

No matter how we slice it, the application market continues to grow at unprecedented rates, and increasingly across more borders.  With smart devices adoption rates more than four times greater than those witnessed during the 1980s PC revolution and twice as great as those seen during the 1990s Internet Boom, no other consumer technology has been more accessible than smart device application software.  It’s literally taking over the world.

China: The New Mobile App Dragon

  
  
  

The era of mobile computing, heralded by Apple in 2007 with the debut of the iPhone, has put powerful, networked computers into consumers’ hands.   Onto these devices, consumers have downloaded billions of apps.  In 2011 alone, we estimate that 25 billion iOS and Android apps will be downloaded.  And Flurry expects that number to roughly double in 2012.

Like other new technology, adoption of iOS and Android devices began primarily in North America and Western Europe, where disposable income is higher.  However, as prices have come down for older iOS models, and OEMs supporting Android have offered more affordable down-market devices, we’re seeing a clear shift in consumer app usage to international markets, including emerging economies.  Let’s warm up with a chart showing how mobile app sessions are expanding outside of the U.S.

iOS Android App International Growth 

The chart above compares mobile app sessions tracked by Flurry Analytics in January 2011 and October 2011.  Flurry now tracks over 20 billion mobile app sessions per month across more than 120,000 applications.  The green area shows the percent of app sessions occurring in the United States, the dominant mobile app market.  While the absolute number of sessions in the U.S. has doubled between January and October, its share of total sessions has declined from 55% to 47%.  This means that the rest of the world is growing faster.  Looking at the balance of the top 10 countries (UK, Canada, Australia, France, Germany, Japan, Indonesia, South Korea and China), this group has increased in collective sessions by 2.7 times between January to October, resulting in an increase in total session-share from 28% to 31%.  Further, the rest of the world (another 217 countries across which Flurry tracks user sessions), has increased in session-share from 17% to 22%.  Among all this growth, there is one country that has caught our attention more than any other.

Meet the Mobile Dragon

You may have heard of China, and its 1.3 billion people.  In fact, you most likely associate the country with high volume, affordable manufacturing.  However, China is also fast becoming one of the world’s most promising consumer economies.  Earlier this year, Bloomberg reported that 2010 foreign direct investment in China rose to a record $106 billion.  Included in this are investments by companies such as Wal-Mart, which co-invested over $500 million in online retailing.  According to the International Monetary Fund, China has the world’s second largest gross domestic product, behind the U.S., and ahead of Japan, Germany and France.   Additionally, the Boston Consulting Group released a report in November 2010 forecasting that the number of middle-income and affluent consumers will almost triple in the next 10 years to 415 million.  As it relates to mobile, China has the most cellphone users in the world, with over 950 million users according to statistics released by China’s Ministry of Industry last week. 

To understand how this translates into mobile app adoption, Flurry compiled a list of the fastest growing mobile app markets in terms of sessions tracked by our service.  We show the chart below.

China Mobile Apps Growth

This chart ranks the top 10 countries, in terms of mobile app session growth, from January 2011 to October 2011.  To be included in the analysis, countries had to have generated at least 10 million monthly sessions in January.  Inspecting the chart, it’s clear that China’s growth is astronomical.  While the top 100 countries are averaging session growth of over 200%, China is delivering more than four times this growth rate, spurred by a massive population voraciously adopting applications.

China Vaults to Second Largest App Economy

With its hyper-growth in app sessions, China has moved up the ranks among the world’s top countries to now occupy the second spot behind the U.S.  The graph below charts China’s share of total mobile app sessions per month, relative to other top countries during 2011.  Note that to get a better view of movements among countries ranked second through fifth, we exclude the U.S. from the chart, given its scale.

UK, China, Australia, South Korea Mobile App Growth

China, represented by the red line, began the year ranked tenth in terms of app sessions, with 1.8% of all sessions tracked by Flurry.  By April, China had climbed to fifth with 2.7% of all sessions, and, in July, overtook the United Kingdom to become the second largest country, with 5.4% of sessions.  By the end of October, China had further grown to 7.3% of sessions.  The U.S., which declined in sessoin-share over the year, finished in October with 47%.  If both China and the U.S. were to continue along their respective trajectories, China could overtake the U.S. by the end of 2013, with both countries converging around 23% app session-share.   

Finally, we took a look at AppCircle, Flurry’s mobile app traffic acquisition network to understand advertising dollars companies are willing to spend on acquisition per market.  In this part of the business, we measure from which country consumers are downloading news apps advertised to them.  The country of origin is a reflection of geographic consumer demand.   Overall, downloads of new apps from China grew from 1.2% to 12% over the course of the year, from January through October.   Similar to the total growth we saw in Flurry Analytics user sessions, the Flurry AppCircle network grew by 2.5 times.  The chart below shows AppCircle-driven downloads per country for the month of October 2011.

China, US, UK, Australia iOS Android App Download

Whether studying China by existing app session generated or new demand for apps, the growth rates are similar.  As one of the fastest modernizing and largest countries in the world, the adoption of mobile apps in China is unprecedented.  For app developers, who more traditionally look at North America and Europe, China is a market too compelling to ignore. A new market has emerged, and China is the new mobile app dragon.

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Flurry is the leading mobile measurement and advertising platform that is optimizing mobile experiences for people everywhere. Flurry's industry-leading Analytics software sees activity in over 400,000 apps on more than 1.3 billion mobile devices worldwide, giving Flurry the deepest understanding of mobile consumer behavior. Flurry turns this insight into accelerated revenue and growth opportunities for app developers, and more effective mobile advertising solutions for brands and marketers. The company is venture backed and headquartered in San Francisco with offices in New York, London, Chicago and Mumbai. 

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