In November 2013, Benedict Evans, a well-respected and widely followed analyst, shared an updated version of his famous slide deck called “Mobile is Eating the World”. This deck quickly made the rounds on social media and was highly referenced by industry and financial analysts who cover mobile. We can’t help but agree with Benedict’s conclusion. For the past five years, we have watched mobile disrupt every industry, in every country, and continue to break its own records year after year. 2013 did not disappoint.
According to Flurry Analytics, overall app use in 2013 posted 115% year-over-year growth. (In this context, we define app use as a consumer launching an app and recording what Flurry defines as a session.)
Every single app category has shown growth over the last twelve months. In the chart below, we have focused on the categories of interest to most. Utilities and Productivity apps posted 150% growth in use year-over year, as smartphones and tablets became personal computers and productivity apps, such as Evernote and Quip, gained sophistication and adoption. Even Gaming, which was feared to reach saturation levels in 2013, posted 66% year-over-year growth in use.
However, the segment that showed the most dramatic growth in 2013 was Messaging (Social and Photo sharing included). The growth in that segment should not come as a surprise to many, given the attention that messaging apps such as WhatsApp, WeChat, KakaoTalk, LINE, Facebook Messenger and SnapChat have received in the press. What is surprising, however, is that the rate of growth (tripling usage year-over-year) dramatically outpaced other popular categories. This type of growth could explain the high valuation Facebook has allegedly put on SnapChat, or Facebook’s rush to add direct messaging in Instagram, an app frequented by teens.
Killer Apps or Killer Platform?
While some of these apps, such as Korea-owned and Japan-based LINE, are enjoying great revenue growth, there is still a debate about whether these apps are simply experiences or more of a platform. 2013 saw a few examples of these apps becoming more of the latter.
In March of 2013, and just three months after launching it game distribution platform, LINE announced that it had delivered over 100m downloads to its gaming partners.
Tencent’s WeChat has conducted an experiment with China’s emerging device manufacturer Xiaomi demonstrating WeChat’s potential as an m-commerce player. In that experiment, Xiaomi launched a new smartphone to WeChat users. The result: 150,000 new smartphones sold in under 10 minutes through a messaging application.
Such examples, coupled with Facebook’s own successful entry into the paid mobile app install market, have demonstrated the potential messaging and social applications have to become a mobile storefront for digital and physical goods.
It is these simple yet very promising anecdotes, coupled with an over 200% year-over-year growth, driving the frenzied land grab in the Communications market. 2014 will be a crucial year for these applications and will determine whether they will remain independent, but highly frequented applications, or become killer mobile platforms and distribution channels. TIME magazine has already placed its bets on the latter. At Flurry, we are fascinated by the growth, the retention rate, the reach and the frequency for this category. We see the potential for what it might become, but before declaring that mobile is all about messaging apps, we would like to see more of these marketing/commerce experiments a la Xiaomi/WeChat happen at scale and in many countries.
Another explosive growth year in mobile has passed. On December 31st, 2013 at 11:59 pm, Flurry Analytics tracked a record 4.7 Billion app sessions in a single day, for a total of 1.126 Trillion sessions for the whole year. Those are some very, very big numbers. One minute later the counter went back to zero. A new year has begun, and if the first few days of January are any indication, the mobile world is looking at another major growth year and yes Benedict (and Fred Wilson too), mobile is continuing to eat the world.
As we said in previous posts, connected devices have become part of our Christmas and Thanksgiving traditions. This marks a change from just a few years ago when smartphones and tablets represented exciting new additions to our lives that we couldn’t wait to unwrap, activate, and start filling up with apps.
Flurry’s data showed another record-breaking level of app downloads this Christmas, but it also provides further evidence that, in the early mobile markets at least, devices are evolving from being our new shiny toys to our everyday companions.
For this report, we looked across more than 400,000 apps that Flurry tracks globally to see what happened around the Christmas tree. We found that Christmas downloads were up by 91% compared to an average day in the first three weeks of December. That is a large increase, but as shown below, the size of the Christmas download spike is diminishing over time as the app market matures and globalizes.
More Signs the App Market is Maturing
2013 was the biggest Christmas yet for mobile app downloads. As the chart below shows, overall app downloads increased by 11% on Christmas 2013 compared to Christmas 2012. Over the same one year time span, there was a 25% increase in app downloads on an average December day. As the data illustrates, both the overall rate of year-on-year growth and the year-on-year Christmas growth have slowed considerably in the past year (from 97% and 90% respectively between 2011 and 2012).
The slowing growth rates and smaller Christmas Day app download spike signal market maturation. Many consumers in Western Europe and English-speaking countries -- large mobile markets where Christmas is a big holiday -- already have a smartphone and / or a tablet. Fewer people are coming online with mobile for the very first time. Consumers who are on second, third or fourth devices have apps that they like and trust, and while they still download new apps, there isn’t much more impetus to do so on Christmas than any other day when they have a little downtime. New device activations do still spike on Christmas, but that spike is waning compared to years past, and it comes on top of a much larger installed base. That means that when new devices are loaded with apps, the overall impact on app download volume is not as big.
The biggest growth in mobile now is coming in countries where Christmas is a less significant holiday or not celebrated at all, so new device activations and app downloads come at different times of the year in those places. And because those high-growth areas are joining an already large global market, overall growth rates are less striking than when the mobile market was new.
Leisure-Oriented Apps Experience the Biggest Christmas Lift
To look at the types of apps that see the greatest increase in downloads at Christmas, we indexed the numbers by comparing Christmas to an average day in the first three weeks of December to eliminate inflation due to the continued growth of the overall connected device installed base.
After doing that, we see a similar phenomenon to what happened on Thanksgiving. Because our devices have become so intertwined with our lives, on a day like Christmas when most of us are relaxing, the apps we download reflect that. Games and social apps were downloaded on Christmas at twice the rate they were on a typical December day. The other categories that experienced the largest surge in Christmas downloads were media (photo, video, music) and lifestyle (sports, books, magazines, entertainment).
Are Prospects Changing For App Developers?
Maturation of the app market means that changes are in store for app developers. The gold rush days of huge jumps in the overall size of the connected device installed base on Christmas, followed by a dizzying rush of app downloads are fading. Of course, there will still be apps that tap into some vein of consumer interest or amusement and developers who strike it rich as a consequence. But overall, the successful developers in 2014 and beyond will be those who put in the hard work of identifying a target group of users, creating apps that work well for them, and continually refining and reinventing mobile experiences to profitably retain those users. We’ll talk more about that in early 2014.
In October of 2013, Softbank Capital made a $1.5B USD investment in Supercell, the maker of two successful mobile games, giving Softbank a 51% ownership of the game maker. This investment caught the world’s attention. It wasn’t just the rich $3B USD valuation Softbank placed on Supercell that intrigued onlookers, but more the speculation that Softbank and its CEO Masayoshi Son were onto a bigger trend. Mr. Son has a solid track record in anticipating big shifts in worldwide markets in general and the tech industry in particular. In the mid-nineties Softbank was a publishing powerhouse. By the mid 2000s the company became an Internet powerhouse. Today, Softbank is the third largest wireless carrier in the world. So what does this investment signal about the big shift that Mr. Son is anticipating? At Flurry we believe he is placing bets on the Mobile Content Explosion that is taking place around us.
Early Indicators Signal the Content Explosion
At Flurry, we have always looked at the applications being started on our platform as a leading indicator of the app economy’s health. This is very similar to how U.S. economists treat housing starts as a leading indicator for the national economy. Typically, developers engage with Flurry and start applications on our platform a couple of months before they list them on App Stores. So if the activity on Flurry increases, it signals that more apps (and content) will be available on the stores within a couple of months.
Looking at application starts on the Flurry network since January 2012, we see an increase in the quarterly growth rate. This is in stark contrast to theories that the app ecosystem is congested. In fact, in just over 18 months, the rate of which new apps are being started on the Flurry network has nearly doubled as shown in the chart below.
While Flurry’s market share in analytics could have increased, we don’t believe it is the major factor in the acceleration of applications starts. Instead, we believe that we have entered a new phase of mobile content explosion, driven by rapidly changing consumer behavior. Over the last two years, application developers and media companies have seen the shift from personal computers to smart mobile devices including phones and tablets that are now in the hands of over 1.2 billion people worldwide. They have also seen the wild and global success of gaming, utility and messaging applications such as LINE, Kakao, Snapchat and WhatsApp. They are simply acting accordingly. With the hopes of reaching these 1.2 billion people with a press of a button, app developers and media companies are building mobile apps like never before.
There is an Audience for That
Pundits have criticized the increasing number of apps and have often claimed that while there are millions of apps out there, very few are being used. They also claim that a few app developers have the lion share of usage, especially in the United States and other mature markets such as Japan and South Korea. Earlier this year, a report from Comscore claimed that Facebook (and Instragram) accounted for 26% of all times spent on mobile. In its latest earnings reports, Facebook’s COO Sheryl Sandberg almost confirmed Comscore ‘s numbers and claimed that Facebook’s share of people's time is larger than that of YouTube, Twitter, Tumblr, Snapchat, LinkedIn, AOL and Yahoo combined. While Facebook’s reach and percentage of time spent are in a league of their own, there appears to be plenty of whitespace for others. In fact, just on the Flurry platform the number of independently owned app developers that have a worldwide audience of over 20 million Monthly Active Users (MAU) has jumped from 7 in Q1 2012 to 32 in Q3 2013. That is whopping 357% growth in 18 months.
In the same period, the number of app developers with an audience over one million MAU has risen from just under 400 to 875, a whopping 121% growth.
These numbers are simply unprecedented, especially because most of these app developers have risen organically, and not as a result of consolidation or through mergers and acquisitions. If anything, the market, its reach and the time spent on mobile is still with the “middle class”, or the mid-tail developers and content owners. Among the 1.2 billion device owners, app developers are finding millions of people to enjoy their apps and the content behind it.
Flurry’s numbers, which show the fast rise of app developers with large audiences, seem to indicate that worldwide, consumers with smart devices are still hungry for apps and mobile content, and app developers are building at increasing rates to feed this demand. We believe that once again, Softbank’s Masayoshi Son could once again be onto something really big.
Flurry now detects about 1 billion smartphones and tablets in use around the world every month. In the last 30 days, we saw activity on more than 2,000 unique device models. As the device base grows, we’re seeing an increasing variety of screen sizes, from sub-smartphones to full-size tablets and beyond. This poses both challenges and opportunities for developers who must consider how audiences, usage behavior and app category affinities vary by form factor.
This report reveals which form factors and screen sizes consumers use most, and for what categories. For this study, we focused on the top 200 device models, as measured by active users in Flurry’s system, which represent more than 80% of all usage. Doing so, five groups emerged based on screen size:
1. Small phones (e.g., most Blackberries), 3.5” or under screens
2. Medium phones (e.g., iPhone), between 3.5” - 4.9” screens
3. Phablets (e.g., Galaxy Note), 5.0” - 6.9” screens
4. Small Tablets (e.g., Kindle Fire), 7.0” - 8.4” screens
5. Full-size tablets (e.g., the iPad), 8.5” or greater screens
Mid-Sized Smartphones Dominate. Phablets are a Fad.
The top bar in the chart below shows how the top 200 device models break down by form factor in the market. Starting from the left, 16% of devices have screen sizes that are 3.5 inches or fewer in diagonal length. 69% of devices are between 3.5 inches and 4.9 inches, which includes iPhone. The light gray are made up of “phablets” such as the Galaxy Note. The orange are small tablets such as the Kindle Fire and iPad Mini. Finally, the far right shows that 7% of the device models in use are full sized tablets such as the iPad. The two bars below show distributions by active devices (taking into account that some device models have more users than others) and the number of app sessions (taking into account that some device models get used for more app sessions per user than others), respectively.
Notice that while 16% of the device models in the market are small phones, they account for only 7% of active devices once users per device are taken into account and 4% of overall app sessions. The opposite is true for tablets, which account for 7% of the top 200 device models yet 15% of all active users and 13% of all app sessions. On the small end, we believe this is because smaller device models, including most BlackBerry devices, are older and therefore have fewer active users per model. They are also not as well-suited to apps because of their small screen sizes. Full-size tablets, however, are ideal for using applications and therefore see a disproportionately higher percent of sessions. They also tend to have more users per device model since this class of devices has been dominated by iPad.
The ‘Is it a phone or is it a tablet’ devices otherwise known as phablets have attracted interest, but currently command a relatively small share (2%) of the device installed base, and their share of active users and sessions is also relatively small.
Form Factor Varies by OS
Not surprisingly, the form factor share of device models and active device users varies by operating system. The chart below shows share of active users by form factor for the different OSs. Inspecting the chart, medium phones are the dominant form factor on all operating systems, except Blackberry, which still has more active users on small phones. Android owns the phablet market and also has the greatest proportion of devices using small tablets. iOS has the greatest share of active devices using large tablets. The only Windows device models that are in the top 200 device models in terms of active users are medium-sized phones.
Tablets Are Gaming Machines
The chart below shows how total time spent in select popular categories is distributed across form factors.
Starting at the top, notice that nearly a third of time spent playing games take places on larger devices, namely full-sized tablet, small tablets and phablets. And while they command consumer time spent, they represented only 15% of device models in use in February and 21% of individual connected devices. These differences are statistically significant.
Studying books and videos, it’s somewhat surprising that tablets, which possess larger screens, do not see a larger proportion of time spent. An explanation for the high concentration in time spent in smartphones could be that consumers watch videos from their smartphones on-the-go (e.g., commuting to work on public transit), whereas they opt for a bigger screen to watch video (e.g., computer or TV) when at work or home. We expect that tablets may represent a greater share of time spent in book and video apps in the future as tablet ownership expands and tablet owners branch out into more types of apps.
Consumers Signal Preference for Smartphones & Tablets
As OEMs experiment with an ever-expanding array of form factors, developers need to remain focused on devices most accepted and used by consumers. From our study, consumers most prefer and use apps on medium-sized smartphones such as the Samsung Galaxy smartphones and full-sized tablets like the iPad. In particular, smaller smartphones under-index in terms of app usage compared to the proportion of the installed base they represent, and would suggest they are not worth developers’ support. Phablets appear to make up an insignificant part of the device installed base, and do not show disproportionately high enough app usage to justify support. Tablets, on the other hand show the most over-indexing of usage, especially in games. The success some game developers are having with a tablet-first strategy, like dominant game maker Supercell, may also inspire developers of other types of apps to consider focusing on tablets.
GDC is in San Francisco this week, just next to Flurry’s headquarters. By the size of the crowds, we (very scientifically) estimate that attendance should easily surpass last year’s record of 22,500. Having tracked the growth of mobile games for several years, we weren’t surprised to see more than 30 sessions during the week focused on smartphone and tablet gaming.
Here’s the big picture, based on our estimates: There are now over 1 billion active smartphones and tablets using apps around the world every month. And of all the apps consumers use, games command more than 40% of all time spent. Looking at revenue, games also dominate. Today, for example, 22 of the top 25 grossing apps in the U.S. iTunes App Store apps are games. Gamers spend money, and game makers are in love.
In this installment of research, Flurry studies how age, gender and engagement vary across key game types. Understand this, and a game developer can design a more engaging game that appeals to the right audience. In short, they can build a better business. In this study, we included more than 200 of the most successful free iOS games, with a total audience of more than 465 million month active users. For a better comparison, we organized these games by their game type (aka game mechanic) instead of traditional, less granular genres. Let’s start by looking at how different kinds of games appeal to gamers by age and gender.
The chart above plots game types by age and gender. From left to right, we show what percent of the game audience is female, with the far right equaling 100% female. The opposite is true for males. For example, 0% female equals 100% male. From bottom to top, we show the average age of the game type’s user base, between 20 to 50 years old. Putting it together, games in the upper right quadrant are preferred by older females. Games in the lower right are preferred by younger females. Games in the lower left are preferred by younger men, and so on.
Young Men and Their Competition
Inspecting the chart, the tightest cluster appears in the lower left; specifically, game types such as Shooters, Racing, and Action RPG skew younger and more male. Card-battle and Strategy games also skew toward younger males. The only genre that skews toward males over 35 is Casino/Poker, with pure poker games skewing even more male than the game type as a whole. This appears to leave a big gap in the market for developers who can create games that appeal to middle-aged and older men.
While men tend to gravitate toward competitive games, women gravitate toward games that are less competitive and tend to be played in a more enduring way. These include Management/Simulation games where players can build out an environment, Social Turn-Based games in which they can play over time with friends, and Match3/Bubble Shooters and Brain/Quiz games, to which users can frequently return when they have a few spare minutes. Slots and Solitaire are both solo-play game types that skew toward females who are over 40, suggesting that they serve as long-term time-fillers.
From a marketing perspective, mobile game publishers can also leverage this knowledge to design targeted campaigns appropriate for the kind of audience to which a game appeals. Flurry’s ad network, AppCircle, allows publishers to target specific demographics for efficient spending.
From Courting to Betrothed
We find that mobile gamers tend to prefer playing a few kinds of games and demonstrate highly predictable play patterns. In other words, they form relationships with their games. Savvy publishers understand these dynamics and use them to inform acquisition strategy, gameplay design, and both in-app purchase and ad-based monetization tactics.
In the chart below, we map game types by usage and retention. On the y-axis we show the number of times per week consumers play different game types. On the x-axis we show how long different games retain their user (i.e., Flurry defines Rolling Retention as the percentage of users that return to the game 30 days after first use, or any day after that). To see how usage and gender work together, we’ve also colored-coded game types by whether they are more male, female or neutral in appeal. Let’s take a look.
The chart above reveals that different strategies should be employed for different kinds of games. It also shows, loosely, that women are more committed while men are more fickle. Sound familiar in life? Hmmm. For the gaming industry, the universal take away is that to optimize engagement, retention, and monetization, developers must tailor their mechanics and messaging to match their ideal target audience. Let’s take a tour of the quadrants.
“Players” try a lot of different games, play for only a short time and tend to be found in highly competitive games (e.g., “Player vs. Player style games). While fickle, they tend to have a high willingness-to-pay in order to progress faster in a game or increase their ability to compete at a high level versus other players. Attracting the right users through targeted acquisition can pay off, as those that stay will pay. Notably, Card-Battle games have very low retention but off-the-charts monetization, extracting enormous revenue from the small number of users that stick. One implication is that these games need to be highly polished at launch with updates ready to go, as gamers will discard games quickly and move on if the game fails to resonate. From a design standpoint, these games should offer immediate opportunities for users to advance by purchasing upgrades and boosts. For the users that might not spend, a lucrative option is to offer in-game currency for watching video ads.
“Going Steady” game types are found in the lower right quadrant of the chart. Usage is less frequent but retention is very high. While these gamers don’t play as often, they are loyal. This group of games tends to be easy-to-learn and easy-to-return-to even after a lapse in playing. They lend themselves to quick play while in a “wait state” (e.g., waiting in line, taking a bus or perhaps checking out of the meeting or class they’re in). Since these are not particularly immersive or competitive games, they are less likely suited to in-app purchase. However, they can generate significant ad impressions over time, and can be designed to show banner or interstitial ads without being overly disruptive to the experience. For games with larger audiences, publishers are utilizing mediation platforms that enable the use of multiple ad networks in one system, ensuring maximized fill and ad-revenue for each space.
“Committed” comprise of consumers who play games for the long-haul. As such, game makers should think of it like a marriage. Think about appoint mechanics like setting a date (hey, even married people need to keep it fresh). These games should be designed with deep content and not try to sell too hard to their users too quickly. From a monetization perspective, commitment-oriented games have great potential for in-app purchases since users of those games are likely to value such purchases and amortize them over long periods of gameplay. And while only the largest titles have achieved this to-date, this group of games are great candidates for in-app product placement. Additionally, with high impressions counts, it is worth publishers’ investment to implement monetization platforms that make ad spaces available to real-time bidded ad exchanges, ensuring they reach the brands and advertisers that value their audiences.
“Infatuated” consumers have fallen hard and fast for their games, but the candle that burns twice as bright burns half as long. They have crushes, and show binge behavior. During the “crush” window, the developer needs to work hard to extract as much revenue as possible. As such, developers must provide vast amounts of content to the users, consistently, in a short-window. Matching monetization to game type, the competitive nature of Strategy games, and Slots users’ incessant desire for in-game currency, make a solid in-app purchase strategy paramount. Sales, events, and purchase opportunities timed with key moments of emotional investment can drive significant profits for publishers.
There’s a Pebble on the Beach for Everyone
In gaming, there are a vast number of game types that attract distinct audiences. And these different consumer segments display very different usage patterns, which have direct implications on monetization strategies. As in life, where the richest relationships are borne from knowing oneself and his or her partner, game companies must also understand both. Only then can you get the most out of the relationship.
Suppose you’re an app developer who wants to ensure that your app is optimized to function well on 80% of the individual connected devices currently in use (e.g., my iPad, your Windows phone). How many different device models (e.g., Kindle Fire HD 8.9" Wi-Fi, Galaxy S III) do you think you need to support? 156. Maybe you’re okay with having your app optimized for only 60% of active devices. That still means that you need to support 37 different devices. Even getting to 50% means supporting 18 devices, as shown below. If you’re a large or particularly thorough app developer, reaching 90% of active devices will require supporting 331 different models.
The dominance of iOS and Android platforms has obscured the proliferation of connected device models. During January, Flurry detected 2,130 different device models with active users (defined as having app sessions during January), including 500 different device models with at least 175,000 active users.
20% of Device Models Is Still a Big Number
Using the 80/20 rule, the market for devices might even seem concentrated: just over 7% of device models account for 80% of active users. Still, the large total number of device models in use poses challenges for developers.
It’s obvious that different apps are required for different platforms. Developers can choose to serve only a portion of the app market by developing apps for only a subset of operating systems (and consequently a subset of device models). Even having made that choice, though, adaptations may be required to accommodate different versions of the same platform (e.g., iOS 6.x versus iOS 5.x, forked versions of Android, etc.), smartphones versus tablets and the increasingly wide variety of screen sizes and aspect ratios in which those devices are now available.
Developing apps on the device models that represent the majority of devices currently in active use has become an expensive and time-consuming process. Not optimizing or testing apps on devices being used by even a minority of people exposes developers to negative user experiences and potentially to buying expensive devices to troubleshoot problems as they arise.
Is the Market for App Development Ripe for Consolidation?
This fragmentation has the potential to change the app ecosystem by making it harder for small developers to compete since they are unlikely to have the resources to support the growing list of device models currently in use. They may also be disadvantaged in economies of scale in promotion (including word of mouth) if their apps are not available or do not work well on most device models. Scale is likely to be increasingly important when it comes to app development and that may lead to consolidation within the app development industry.
Developer surveys, such as Vision Mobile’s, consistently show that the revenue distribution for app developers is highly skewed: only a minority of developers make more than $500 per app per month. The increasing need for scale to ensure full functionality on the full range of connected device models in use may help explain why. The growing challenge of discoverability in an increasingly crowded app market is also likely to be part of the explanation.
So what is a small developer to do? One strategy is to focus on the device models used by the greatest number of people. Surveys consistently show that developer commitment to iOS is disproportionately strong relative to the market share for iOS devices. Our results suggest this trend is probably a consequence of developers seeking efficiency (the most users for the least work) because device models running on the iOS platform average 14 times the number of active users than device models running on other platforms. This is shown in the chart below in which the average number of active users for device models running on different operating systems are indexed to Android (where Android = 1).
It’s difficult to fully disentangle platform from manufacturer and comparing devices made by Apple to devices made by the three other device manufacturers with the greatest average number of active users per device model tells a similar story. This is shown in the chart below – this time indexed so the average number of active devices per Samsung device model = 1. As shown in the chart, on average Apple device models have more than seven times as many active users as Samsung device models and more than four times as many as Amazon device models.
App Sessions Are More Concentrated than Active Devices
Of course, some people use their devices more than others and many developers prefer to target heavier app users. So what about app sessions? They are somewhat more concentrated than active devices. As shown below, for developers to ensure they were optimized on the devices responsible for 50% of app sessions conducted during January, they would have needed to support only eight different device models and to cover 80% of sessions they would have needed to support 72 different device models. That’s still a lot of device models, but it’s less than half the device models required to reach 80% of active devices.
In addition to having more active devices per device model than other platforms, iOS device models average more app sessions per active device than device models running on other platforms. This is shown below, again using an index for which app sessions per active Android device are set to one. This further clarifies why developer support for iOS is disproportionate to iOS’ share of the installed device base. Developers can reach more active devices by developing for a smaller number of device models on iOS and they can also capture the attention of very active users. People who have iOS devices tend to have more app sessions, creating more opportunities for in app purchases, advertising revenue and paid app purchases.
Viewed at the manufacturer level, Apple device models average more sessions per device than device models made by the other manufacturers previously shown. This is shown below, again indexed so that average sessions per Samsung device = 1.
The App Development Company
With competition in the device market heating up, manufacturers seem likely to fill and expand product lines with an increasing number of devices intended to differentiate themselves and address the preferences of specific types of users. That implies that it will only become more difficult for developers to optimize, test and support their apps for use on all device models. And yet doing exactly that is likely to be increasingly important for app developers given the market for apps is also becoming more crowded and more competitive, making negative user experiences more damaging. Promoting apps and leveraging that investment in promotion across as many potential users as possible will also become all the more critical. Putting all of this together, we expect a future in which app developers are less frequently individuals with a creative idea and a laptop and more frequently, companies designed to develop, produce and distribute apps at scale.
The rate of iOS and Android device adoption has surpassed that of any consumer technology in history. Compared to recent technologies, smart device adoption is being adopted 10X faster than that of the 80s PC revolution, 2X faster than that of 90s Internet Boom and 3X faster than that of recent social network adoption. Five years into the smart device growth curve, expansion of this new technology is rapidly expanding beyond early adopter markets such as such as North America and Western Europe, creating a true worldwide addressable market. Overall, Flurry estimates that there were over 640 million iOS and Android devices in use during the month of July 2012.
This report reveals which countries have the largest active smart device installed bases, are experiencing the fastest growth and are most penetrated. We also show how the distribution of app usage is shifting to become increasingly international. For this report, Flurry uses data from more than 200,000 applications that it tracks, running on more than 640 million devices worldwide. With its application coverage, Flurry estimates that it can reliably detect over 90% of all iOS and Android devices active in the world during a given month. Let’s start by looking at which countries make up the world’s largest app markets.
Compared to July 2011, the United States and China continue controlling the top two spots, with China dramatically closing the gap on the United States. Year-over-year, Flurry calculates that net active devices in the U.S. grew by approximately 30 million, while China saw more than 100 million new active devices enter the market. At this rate, China’s active installed base could overtake the United States as early as the 2012 Holiday season. Please note that Flurry detects actual active devices upon which apps are running, and that these numbers will differ than reported hardware sales by OEMs. Compared to last year, 9 of the top 10 countries remain unchanged, excepting Brazil, which pushes Australia just out of the top 10, into the 11th position.
The chart above shows the growth in active devices per country between July 2011 and July 2012. China leads the world with an astounding 401% year-over-year growth, demonstrating the power of the country’s vast population coupled with its rapidly growing middle class. Notably, all four BRIC countries (Brazil, Russia, India and China) are represented in the top 10-ten growth countries for smart devices, reinforcing their new stage of advanced economic development. For this chart, Flurry selected countries that had a minimum of a half a million active devices as of July 2011.
In addition to the fastest growing countries, Flurry also measured which markets are mostly rapidly nearing saturation. Specifically, we compared the number of active devices in each country relative to its adult population, between ages 15 and 64 years old. While Singapore, Hong Kong and Sweden form the top three countries in terms of smart device penetration, indicating their strong consumer technology economies, each country has a relatively small total population, ranging between 5 to 10 million. By comparison, the United States, the fifth most penetrated country with 78% of its adult population using smart devices, has a total population of more than 310 million. South Korea and the United Kingdom have the 2nd and 3rd largest populations among the top 10 penetrated markets, with roughly 50 million and 60 million respectively.
Finally, we look at look at the volume of application usage across the globe tracked by Flurry, which we estimate comprise of approximately one fifth of all worldwide app sessions on iOS and Android, the world’s largest cross-platform sample. Year-over-year app sessions in the U.S. declined as a proportion of WW sessions between July 2011 and July 2012, from roughly one-half to a little over one-third. The balance of the top 10 (ranks 2 -9) grew from 27% in July 2011 to 36% in July 2012. The rest of the world also made gains from 21% in 2011 to 28% in 2012. In total, 64% of all app sessions now take place outside the U.S.
Enabled by digital distribution across the unprecedented growing base of iOS and Android smart devices, global software distribution has never been so frictionless. After building an application, a development team can distribute its app on Android instantaneously and, after review by Apple, can be in the App Store within roughly one week. With international growth accelerating, there has never been a better time, in the history of technology, to be a software developer.
This week, wedged between Apple’s WWDC and Google I/O is Microsoft’s Windows Phone Summit in San Francisco on Wednesday, June 20. Additionally, Microsoft is holding a last-minute press conference that “you don’t want to miss” tonight in Los Angeles. Barnes & Noble claims they are not part of the announcement, and others speculate that Xbox Live streaming will be part of the offering. Given the popularity of gaming on smartphones and tablets, and the strength of the Xbox platform, this would be a strong move for Microsoft. Because the development community is strongly made up of gaming studios, a move such as this could help galvanize the 3rd-party development community. Over the last couple of years, there has been an all-out war among Apple, Google, Microsoft, RIM and others to win the hearts and minds of developers. It appears that Microsoft is now making its move.
This report follows up on another released by Flurry earlier this month, showing that Apple continues to hold a strong lead over Google’s Android for developer support. Looking beyond the top two platforms supported by developers, Flurry evaluates the possibility for a 3rd legitimate platform provider to emerge at this stage of the game. At Flurry, we track developer support across the platforms that compete for their commitment. When companies create new projects in Flurry Analytics, they download platform-specific SDKs for their apps. Since resources are limited, choices developers make to support a specific platform signal confidence, as they invest their R&D budget where they expect the greatest return. Flurry Analytics has been adopted by more than 70,000 companies across more than 190,000 applications. Let’s start with a comparison of the Research in Motion (RIM) versus Microsoft.
Microsoft Blows by Beleaguered RIM
The chart above shows the percent of new project starts represented by Microsoft and RIM among all platforms Flurry supports (e.g., iOS, Android, BlackBerry, Windows Phone, etc.). A new project start in the Flurry system is when a developer sets up an application for analytics tracking prior to the launch of that app. Over the past 12 months, Project starts for Windows Phone have grown by more than 600%, now accounting for 6% of all new project starts in the Flurry system during June 2012. As a percent of new project starts, RIM has remained flat. Overall, on an absolute basis, total new project starts within Flurry have grown by approximately 50%.
Microsoft Sets Its Sights on Android
We next combine all new projects across the top 4 platforms within the Flurry system, comparing Q2 2011 versus Q2 2012.
The chart above compares the percent of new projects built by developers per platform within Flurry. For this snapshot, we compare Q2 2011 versus Q2 2012. Year-over-year, developer support has shifted, with Microsoft’s dent becoming more visible, now representing 4% during Q2 2012. iOS and Android share continue to oscillate mildly now clocking in 67% for iOS and 28% for Android. BlackBerry remains flat. What is important to note is that all four platforms are growing, just at different rates. Specifically, growth rates per platform for year-over-year growth are: iOS 66%, Android 82%, Windows Phone 521%, BlackBerry 13%. Viewing the relative growth rates show just how much Microsoft is gaining against the market.
Considering the first chart in this report, Microsoft growth has been accelerating within Q2. If we look at just Android and Microsoft in the month of June, for every Windows Phone new project started, 4 have been started for Android. Considering the much smaller Windows Phone installed based compared to Android, Microsoft is currently over-indexing. From Google’s point-of-view, this must elevate Microsoft from an “also-ran” to a potential competitive threat with the resources and know-how to kick-start momentum and mount a campaign to reel in the second place player.
Generally, Windows Phone could be gaining against the entire market as a result of developer frustration for Android fragmentation, concern for increasing competition on iOS and a lack of faith in BlackBerry. Whatever the reason, it’s clear that Microsoft still knows how to attract third party developer support. With its Nokia-partnership and high anticipation around today’s Microsoft Tablet announcement, Flurry expects Microsoft to make continued headway over the course of 2012.
At the recent Le Web conference in France, Google Chairman Eric Schmidt declared that “Android is ahead of the iPhone now.” According to Schmidt, Android’s success is due to “unit volume, Ice Cream Sandwich,” because “the price is lower” and because “there are more vendors.”
Google announced last week that worldwide Android Market app downloads now exceed one billion per month. Compared to iOS, which surpassed 18 billion total downloads in October, Google revealed that the Android Market recently surpassed 10 billion total downloads. This comes on the heels of comScore’s latest MobiLens report, showing that, for the three months ending in October, Android devices now account for 46.3% of U.S. smartphone subscribers versus 28.1% for Apple. By these accounts, Google Android has momentum. Mr. Schmidt further predicted at Le Web that, within six months time, Android would become the first platform for which developers build.
At Flurry, we track developer support across the platforms that compete for their commitment. When companies create new projects in Flurry Analytics, they download platform-specific SDKs for their apps. Since resources are limited, choices developers make to support a specific platform signal confidence, as they invest their R&D budget where they expect the greatest return. Further, because developers set up analytics several weeks before shipping their final apps, Flurry has a glimpse into the bets developers are making ahead of the market.
In total, over 55,000 companies use Flurry Analytics across more than 135,000 applications. For this report, we study new project starts for 2011, during which developers set up analytics for approximately 50,000 apps.
The chart shows the number of applications integrated with Flurry Analytics during 2011, by quarter, starting with Q1 on the left, and finishing with Q4 on the right. The percent of new projects created for iOS is represented in grey. Google Android’s share of new projects is shown in green. Note that we estimated the remainder of December based on the first third of the month’s data already collected. We further estimate that Flurry Analytics powers approximately 25% of all apps downloaded from the App Store and Android Market combined.
Over the year, developer support for Android has declined from more than one-third of all new projects, at the beginning of the year, down to roughly one-quarter by the end. While the market nearly doubled for both platforms, we believe key events changed the proportion of support between these two platforms. Of particular note, Apple expanded distribution for iOS devices beyond its long-standing exclusive with AT&T to include Verizon in February and Sprint in October. Further, the highly successful launches of iPad 2 in February and iPhone 4S in October resulted in increased developer support for Apple. By contrast, Android does not enjoy a truly recognizable flagship device among its army of OEMs supporting the platform.
It’s Beginning to Look a Lot Like Christmas
In particular, the market expanded aggressively in Q3 in anticipation of iPhone 4S support and the upcoming holiday season. Flurry saw a similar boom in developer activity, ramping up to the holidays, in both 2009 and 2010. And while allegiance to iOS has been more tilted toward Apple in previous years, new project starts for iOS still outnumber those for Android approximately three-to-one.
Android Momentum Revisited
Now let’s return to Google’s position that “Android is now ahead of iPhone.” In terms of the number of devices activated per day by consumers, this is indeed the case. In November, Google released that 200 million total Android devices have been activated with 550 thousand now activated daily. In October, Apple announced that over 250 million iOS devices had been activated, and Flurry estimates that more than 450 thousand are activated daily. With converging installed base numbers, and Android now edging out iOS for daily activations, the key question remains: Why are developers still supporting iOS three times more than Android?
Show Me the Money
Anecdotally, developers consistently tell us that they make more money on iOS, about three to four times as much. To be sure, we pulled a sample of in-app purchase data from a set of top apps with versions on both iOS and Android, comprising of several million daily active users (DAUs). Running the numbers, we find that, on average, for every $1.00 generated on iOS, the same app will generate $0.24 on Android.
Android ecosystem challenges have been widely publicized, from OS fragmentation to concerns about the impact of not curating the Android Market. However, the largest single factor that appears to impact developer support for the platform is the consumer’s ability to pay. This comes down to Google Checkout penetration. Upon setting up an iOS device, a consumer must associate either a credit or gift card to her iTunes account. In theory, this means that 100% of all iOS device users are payment enabled. This has not been the case for Android, resulting in lower revenue generation possibilities on the platform. With the recent integration of Google Wallet and Google Checkout, as well as their current $0.10 Android app sale to spur new account sign-ups, Google appears to be taking steps to correct this.
While exact Google Checkout penetration is unknown, the respective revenue generated by each platform for same apps, provides the morale of the story: Despite installed base numbers and daily activations, the almighty dollar still drives business decision making among application developers. And with the critical holiday season upon us, developers are betting on iOS for Christmas 2011.
Apple and Google have ushered in a new era of mobile computing whose consumer adoption is rivaled only by the PC revolution of the 1980s and the Internet boom of the 1990s. Since 2007, more than 440 million iOS and Android devices have been activated, with 1 million additional devices across both platforms now activated each day.
On top of this massive and rapidly expanding platform, a software battle is raging. With very low barriers to entry, and friction-free digital distribution, companies have been feverishly building, shipping and updating applications, intent on capturing and monetizing consumer audiences. To illustrate this growth, let’s look at the number of available apps in the App Store vs. the Android Market.
This chart is comprised of publicly available data. Where data wasn’t available for the same month in both markets, we estimated the number of available apps based on interpolation (e.g., approximating a point between two existing data points), or by looking at the growth rate leading up to a specific month. The number of apps is growing significantly in both markets. And while the App Store has attracted more apps to date, the Android Market is closing the gap. Now, let’s turn our attention to total app downloads.
The chart above sums Android Market and App Store downloads per month. Starting on the left, with January 2010, we show downloads per month every three months, until we reach October 2011. In October 2011, we estimate over 2.6 billion apps were downloaded. The number of apps now downloaded is four times greater than this time last year, in October 2010. With the holiday season under two months away, the 3 billion-mark download per month mark surely will be shattered this December. Month-over-month, app downloads have been growing at an astounding rate 11.4%. With app downloads growing swiftly, even faster than the number of apps being made available, let’s now look at app retention.
This chart shows the percent of consumers that continue using an app, since their first use, over 12 months. At the far left, marked as month “0,” 100% of a consumer cohort begins using an app. After three months, 24% of them continue using. After 6 months, this percent shrinks to 14%, and, by 12 months, only 4% are left. For this analysis, we compiled data from 25 apps downloaded a cumulative 550 million times.
With app downloads increasing month-over-month and app usage not only climbing, but also surpassing web usage, we know that consumers are both discovering and using apps more than ever. And while the industry often talks about discovery as a problem, we think the real problem is traffic acquisition. To understand this, we turn to the web.
Online, website marketers don’t stop marketing after they get a consumer to visit the site only for the first time. They can get in front of the consumer in various ways again, and spur a return visit by having the consumer click on a link. Typically, online, a visit starts from an organic search result, but search doesn’t exist for apps the same way, and consumers seem to browse more, especially given touch interfaces. The closest thing to search in the app world is a consumer browsing the top ranking lists, which represents “popularity” in a similar way to top ranking organic search results. However, in the app world, top rank lists are more like “paid search” since heavy advertising is what typically launches an app to rank high, at least for a while.
Further, always trying to rank high, as a tactic, is not only untargeted and expensive, but also suffers from diminishing returns. First, the bar required to make the top 25 keeps rising, as the installed base of consumers grows and more apps compete for a fixed number of top spots. Regarding diminishing returns, an app can only appeal to first-time-users each time it ranks. It’s a pure first-time acquisition tool. App users don’t re-launch apps when seeing them in the top rankings. They need to go to their app icon and launch from there. So as an app’s installed based grows over months, even years, the relative number of incremental users that can be added from ranking in the charts continues becomes relatively smaller. In other words, over time, an app is better off targeting its much larger installed base of users to increase usage. This is the equivalent of traffic acquisition.
The key challenge is that developers lack the tools to bring traffic back to their app, post-download. And, therefore, the industry has a traffic acquisition problem, not a discovery problem. Only when compelling ways of connecting with existing app users are established, that allow the easy re-launch of an app, can app makers address retention through marketing, and fully control their own traffic acquisition.