This month, the world’s two largest mobile app platform providers, Apple and Google, enter what is arguably the most critical month of the year for each company, when each hosts their annual developer conference, the Apple Worldwide Developer Conference (WWDC) and Google I/O. While engaged in a multi-year platform war, their success largely depends on innovation provided for their platforms by the third party developer community. If the developer community embraces one platform over the other, developers will build the software that infinitely extends the value of the consumer experience, giving a platform a meaningful edge. The perceived availability of a large, steady stream of high quality apps is a key reason for consumers to initially choose an Android or iOS device, and then to remain loyal. Moreover, given that the mobile industry is among the leading sectors in the worldwide economy, the outcome of these two conferences can largely impact the fate of some of the most prolific, innovative forces in the world’s economy today. Combined, Apple and Google have a market cap of approximately three quarters of a trillion dollars.
This report compares developer support for iOS versus Android and explores the underlying factors that could explain varying levels of developer loyalty. We use the data set collected by Flurry Analytics, now powering consumer insights for more than 70,000 companies across more than 185,000 mobile apps. Each day, Flurry tracks more than 1.2 billion anonymous, aggregated end user sessions across more than 100 million unique devices. Each month, Flurry tracks over 36 billion end user sessions across more than a 500 million devices, a number that is more than 60% of Facebook’s monthly active user base.
Oh Captain, My Captain
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.
The chart above shows that Apple continues to garner more support from developers. For every 10 apps that developers build, roughly 7 are for iOS. While Google made some gains in Q1 2012, edging up to over 30% for the first time in a year, we believe this is largely due to seasonality, as Apple traditionally experiences a spike in developer support leading up to the holiday season. Apple’s business has more observable seasonality.
The Apple 2-for-1 Proposition
Among the reasons iOS appears more attractive to developers is the dominance by Apple in the tablet category. Not only does Apple offer a large, homogenous smartphone base for which to build software, but also when developers build for smartphones, their apps run on Apple’s iPad tablets as well. That's like getting two platforms for the price of one. Apple offers the most compelling ‘build once, run anywhere’ value proposition in the market today, delivering maximum consumer reach to developers for minimal cost.
The pie chart above demonstrates just how much Apple dominates the tablet category. The Galaxy Tab and Amazon Kindle Fire hold very distant second and third places in terms of consumer usage. To build the chart, Flurry aggregated total worldwide user sessions across the first five months of the year, January through May.
Android Fragmentation Pain
Opposite to the efficiency Apple offers developers through their homogenous device base, Android fragmentation appears to be increasing, driving up complexity and cost for developers. Further, this fragmentation is concentrated primarily in just smartphones, as there is no serious Android tablet contender to the iPad. For Android, Flurry observes fragmentation along two significant vectors, devices and firmware. Let's look at device fragmentation first.
The chart above shows the number of consumer application sessions across the top 20 Android devices in May 2012. Four major OEMs – Samsung, Motorola, HTC and Amazon – have Android devices in the top 20. 17 of the top 20 hold a share of 6% or fewer, among the top 20, meaning that each additional device a developer supports will deliver only a small increase in distribution coverage. However, on Android, both devices and firmware contribute to fragmentation, so let’s look at firmware fragmentation next.
The above chart reveals that the majority of devices in the market run Gingerbread, which is only the third newest iteration of the Android OS. Honeycomb, more optimized for tablets, and Ice Cream Sandwich, which put a lot of effort into the user interface, have a combined 11% of penetration in the market. Froyo, which shipped before Honeycomb and Ice Cream Sandwich, alone has a higher share of firmware penetration than the two newer, more advance firmware versions combined. This means that the majority of consumers are running on an Android operating system that is three to four iterations old.
Running a comparison of revenue generated by top apps on both iOS and Android, Flurry calculates that the difference in revenue generated per active user is still 4 times greater on iOS than Android. For every $1.00 a developer earns on iOS, he can expect to earn about $0.24 on Android. These results mirror earlier findings from similar analysis Flurry conducted in Q4 of 2011 and Q1 of 2012.
At the end of the day, developers run businesses, and businesses seek out markets where revenue opportunities are highest and the cost of building and distributing is lowest. In short, Android delivers less gain and more pain than iOS, which we believe is the key reason 7 out of every 10 apps built in the new economy are for iOS instead of Android.
Over the next two weeks, the momentum of two of the world’s most innovative, influential and prolific technology companies will be impacted by the reaction of the development community to their conferences, Apple WWDC and Google I/O. And as developers watch Apple and Google, the world should watch developers.
With the frenzy created by the speed and price for which Facebook bought Instagram, app entrepreneurs and investors are excitedly looking for where consumers will next flock within mobile apps. In a recent report, Flurry quantified the dramatic increase in usage among social networking apps on smartphones. For the first time since the App Store launched in summer 2008, the Games category found itself rivaled by another category in terms of time spent in apps. The rise in popularity of apps like Instagram, Path and Skout signals a new era of content consumption on mobile phones where consumers are finding new, compelling ways to spend their time beyond just games.
This report reveals emerging trends in mobile app category usage. By studying how consumer time is shifting across app categories, we provide an early, clear demand signal. In other words, we see where consumers are spending an increasing amount of time in apps beyond Games and Social Networking to show what’s next in mobile app popularity. For this study, Flurry leverages a sample of 8 million active mobile app users across all app categories. Flurry Analytics tracks more than 180,000 applications for more than 67,000 companies across iOS, Android, HTML5, Windows Phone and BlackBerry. The chart below shows the fastest growing app categories based on where consumers are spending their time.
The above chart shows the top five app categories based on growth in minutes spent from October 2011 to March 2012. Starting on the left, the Photo & Video category has grown the most, by 89%, in minutes spent per active user. Music, Productivity, Social Networking and Entertainment round out the top five with growth of 72%, 66%, 54% and 40%, respectively. These categories represent the fastest growing categories in mobile apps over the last 6 months. When considering what’s hot beyond the gaming category on mobile, this gives us a strong indication. Beyond the topical Instagram success story, chances are that future hits are among these categories. Some apps with momentum today include Path, Skout, Viddy, SocialCam, Evernote, Spotify and more. Please note that for iOS and Android, Flurry looks at equivalent categories (e.g., Photos & Videos in the iTunes App Store vs. Media & Video on Google Play). For all charts we use iOS category names.
Trendspotting: The Instagram of Video
We next drill down into the Photo & Video app category to better understand growth in this category. Expanding the time range in this chart, we show the number of minutes spent by active user per month from July 2011 through March 2012.
The “overnight” sensation of video sharing apps like Viddy and SocialCam has actually been more like a 9-month tsunami gaining power. Looking at growth from July 2011 to March 2012, time spent in Photo & Video has grown by 166%. Video sharing apps offer a compelling benefit to consumers, allowing them to conveniently capture, edit and share videos on-the-fly using the powerful mobile computing devices in their pockets. Trained by the sharing behavior of Facebook, and enabled by a confluence of underlying technology like built-in HD video cameras, hardy on-device processors, increased network bandwidth, cloud storage and user-friendly applications like Viddy and SocialCam, social video apps are taking off. It’s a meaningful example of the unique innovation possibilities afforded by mobile apps.
Cool Kids with Pumped Up Kicks tell YouTube: “You Better Run Faster than My Bullet”
Back in 2006, Google acquired the buzzy YouTube for $1.65 billion after its own Google Video service could not keep pace. Now it appears new “cool kids” in the form of Viddy and SocialCam threaten to disintermediate the web juggernaut’s acquisition. In a recent Forbes article, Eric Jackson laid out a hypothesis that the new breed of social companies, typified by Instagram, view mobile as their primary, often exclusive platform. “They don’t even think of launching via a web site. They assume, over time, people will use their mobile applications almost entirely instead of websites.” He concludes that “we will never have Web 3.0, because the Web’s dead.” Just consider that it’s now possible to capture, edit, share and view engaging, meaningful videos among friends, all from your phone, without ever touching a computer. In this perspective, a threat to YouTube begins to feels real.
To generate a comparison between mobile app and Internet video consumption, Flurry combined its data set with publicly available comScore Video Metrix data. In the chart above, we show the number of minutes consumers spend per month using smartphone video apps versus Google Sites on the Internet (primarily YouTube). Over the course of 2011, minutes spent viewing video content online grew from 276 minutes to 472 minutes, or 71%. Over the same time period, video apps grew from 63 minutes to 152 minutes, or 141%. While mobile app video consumption grew more than online consumption, the gap in usage at the end of 2011 was still meaningful. During 2012, however, is where things get interesting. As online video consumption dropped by 10%, mobile app video consumption increased by another 52%. By then end of March, consumers were spending 54% of amount of time in mobile video apps compared to Google Sites online, 231 minutes in apps versus 425 minutes online.
While it cannot be concluded that mobile video apps are cannibalizing YouTube, the shift in time spent between these two platforms appears to be a signal of disruption. Think of it this way: With every mobile video you share of friends, family, vacations, parties and weddings, you are likely loading another bullet in the chamber for Web 3.0. For YouTube, it appears they need to run, outrun your gun.
The economic boom created by Apple and Google through their iOS and Android platforms has precipitated a renaissance among entrepreneurial developers. With some of the lowest barriers to entry in the history of software development and distribution, apps are getting built and downloaded at breakneck speeds. Earlier this month, Apple crossed a record 25 billion downloads from more than 550,000 available apps. Google announced in December 2011 that it had crossed 10 billion downloads from 400,000 available apps.
As markets mature, rational economic behavior emerges. Even the most passionate, idealistic software start-ups focus increasingly on markets where revenue generation is highest. In this report, Flurry compares the ability for app developers to generate revenue per user across the major app stores. We examine a basket of top-ranked apps that have similar presence across iOS, Amazon and Android. Their primary business models are in-app purchase, which is the revenue type we compare for this analysis. Additionally, earlier research by Flurry found that the in-app purchase revenue model generates the majority of revenue for apps. Combined, these apps average 11 million daily active users (DAUs). We measured their revenue per user over a 45-day period, from mid-January through the end of February 2012.
The chart above compares revenue generated per user across iOS, Amazon and Android app stores. We start by taking the revenue generated per user in the iTunes App Store and setting it to 100%. We then compare the relative revenue generated per active user from Amazon and Google to the amount of revenue per active user generated by the iTunes App Store. Doing so, we find that Amazon Appstore revenue per active user is 89% of iTunes App Store revenue, and Google Play revenue per active is 23% of iTunes App Store revenue. Another way to interpret the results is that, for the same number of users per platform, every $1.00 generated in the iTunes App Store, will also fetch $0.89 in the Amazon Appstore and $0.23 in Google Play. These results mirror those of a similar analysis conducted by Flurry last December, where we found for every $1.00 generated per user in the iTunes App Store, developers generated $0.24 per user in the Android Market.
Amazon's bet to fork Android in order to put consumers into their own shopping experience on Kindle Fire appears to be paying off. Showing its commerce strength, Amazon already delivers more than three times the revenue per user in its app store compared to what Google generates for developers.
For some possible insight, let's consider the DNA of each company. Apple runs the highest revenue-per-square foot generating retail store on the planet as well as the successful iTunes store. Amazon, who invented the one-click purchase, perfected online shopping with data, efficiency and customer service. Google’s strength is in scalable online search engine and advertising technology. Running a store, retail or digital, has not been Google's traditional core competency.
As developers make decisions to support different platforms, the ability to generate revenue per user will always be a key factor. Based on revenue potential, we expect to see an increasing number of developers support Amazon. We also believe that companies such as Samsung, the leading Android-supporting OEM, could also consider emulating Amazon’s move to fork Android. Google, who recently saw the departure of Eric Chu, the most public-facing proponent of Android Market improvement, will need to reduce commerce friction to maintain strong developer support. From an ecoystem perspective, the emergence of Amazon as an additional distribution channel appears to be a boon for developers.
[UPDATE: For clarity, I went back through this post and specified, where appropriate, including in the title of the chart, that the revenue comparison in this analysis was per user, not total revenue generated. Peter]
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.
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.
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.
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.
The era of mobile computing, catalyzed by Apple and Google, is driving among the largest shifts in consumer behavior over the last forty years. Impressively, its rate of adoption is outpacing both the PC revolution of the 1980s and the Internet Boom of the 1990s. Since 2007, more than 500 million iOS and Android smartphones and tablets have been activated. By the end of 2012, Flurry estimates that the cumulative number of iOS and Android devices activated will surge past 1 billion. According to IDC, over 800 million PCs were sold between 1981 and 2000, making the rate of iOS and Android smart device adoption more than four times faster than that of personal computers.
Powerfully, smartphones and tablets come with broadband connectivity out-of-the-box, instantly combining the best of “Silicon” and “The Cloud” for consumers. The Internet, which served to connect the installed base of PCs, grew to 495 million users by the end of 2001, according to the International Telecommunication Union. With the Internet beginning its commercial ramp in 1996, iOS and Android devices will see double the number of device activations during its first five years compared to the number of Internet users reached during its first five years (Internet 1996 – 2001 vs. Smart devices 2007 – 2012).
On top of this massively growing iOS and Android device installed base, roughly 40 billion applications have already been downloaded from the App Store and Android Market. More than ever, consumers are splitting their time accessing services on the Internet from PCs versus doing so on mobile devices from apps. Last summer, Flurry published a report detailing how the average smartphone user, for the first time ever, began spending more time in their mobile applications than they do browsing the web. Updating the analysis, Flurry finds the usage gap continues to widen. Let’s look at the updated numbers.
The chart compares how daily interactive consumption has changed over the last 18 months between the web (both desktop and mobile web) and mobile native apps. For the web, shown in green, we built a model using publicly available data from comScore and Alexa. For mobile application usage, shown in blue, we used Flurry Analytics data, which tracks anonymous sessions across more than 140,000 applications. We estimate this accounts for approximately one third of all mobile application activity, which we scaled-up accordingly for this analysis.
Since conducting our first analysis in June 2011, time spent in mobile applications has grown. Smartphone and tablet users now spend over an hour and half of their day using applications. Meanwhile, average time spent on the web has shrunk, from 74 minutes to 72 minutes. Users seem to be substituting websites for applications, which may be more convenient to access throughout the day.
Our analysis shows that people are now spending less time on the traditional web than they did during the summer 2011. This drop appears to be driven largely by a decrease in time spent on Facebook from the traditional web. In June 2011, the average Facebook user spent over 33 minutes on average per day on the website. Now, that number is below 24 minutes. Time spent on the web without Facebook has grown at a modest rate of 2% between June 2011 and December 2011.
The analysis also shows that people are spending ever more time in applications. In fact, time spent in apps and the web, combined, has grown as users lead a more connected life. This growth though has been driven entirely by applications. The growth in time spent in mobile applications is slowing – from above 23% between December 2010 and June 2011 this year to a little over 15% from June 2011 to December 2011. The growth is predominately being driven by an increase in the number of sessions, as opposed to longer session lengths. Consumers are using their apps more frequently.
Facebook Pushes into Mobile Apps
Based on our analysis, we believe that Facebook users, and users of other traditional style websites, are increasingly accessing services through mobile applications than from desktops. Nielsen recently reported that Facebook is the most used app on Android among 14 – 44 year olds, surpassing usage of Google’s own native, pre-installed apps. Additionally, Facebook Messenger became the top downloaded app, at least one time during 2011, across more than 100 different App Store countries. In the U.S., the largest App Store market, Facebook Messenger ranked as the top overall app across most of the holiday week, during which more downloads occur compared to any other week.
With Facebook’s recent push into HTML5 with Project Spartan, where apps built for Facebook’s platform can run on top of the Facebook app, instead of requiring the user to launch the iOS app equivalent, this poses a disintermediation challenge to Apple. As Apple and Google continue to battle for consumers through the operating system and devices, Facebook is demonstrating that it can leverage its hold over consumers at the software level, through the power of the social network, across multiple platforms.
Facebook and Google are already locked in a battle for the online consumer, with Facebook having steadily taken share from the search engine giant over the last several years. Recently, as Google countered with its socially-oriented Google Plus, Circles and Hangouts services, Facebook added features such as news feeds to further lock in consumers to its service by obviating the need to discover content through search.
Likewise, Apple’s recently launched iCloud service, which allows consumers to store their most personal content, including music, photos and contacts, as well as its deep integration with social-service, Twitter, appears to buttress against Facebook’s ability to control the consumer relationship. With games as the top app category across Facebook, iOS and Android, as well as having become increasingly social in nature, Facebook is countering to reclaim valuable game play sessions it earned from its own platform play launched in 2007, rather than simply surrendering them to iOS and Android, who have effectively wooed consumers off of the web platform to mobile apps.
Games & Social Networking Dominate Mobile App Usage
With mobile app usage soaring, Flurry additionally studied which categories most occupy consumers’ time. The results are shown in the pie chart below.
The chart clearly shows that Games and Social Networking categories capture the significant majority of consumers’ time. Consumers spend nearly half their time using Games, and a third in Social Networking apps. Further considering that Flurry does not track Facebook usage, the Social Networking category is actually larger. Combined, from just what Flurry can see, these two categories control a whopping 79% of consumers’ total app time. This breakdown in usage reveals Facebook’s inherent popularity as the leading social network, as well as how important controlling the game category is for all platform providers. As we drill down into the category data, consumers use these two categories more frequently, and for longer average session lengths, compared to other categories.
Any way we slice it, Games and Social Networking apps deliver the most engaging experience on the web and mobile today, and set the stage for the battleground for controlling the consumer relationship going forward for all platform providers on all platforms.
The last week of the year, from December 25 through December 31, sees more iOS and Android device activations compared to any other week of the year. Starting with Christmas Day, the largest single device activation day of the year, the week between Christmas and New Year’s Day is filled with significantly elevated device activations and app downloads. For application makers, this holiday “power week” is far more important than the run-up to Christmas itself. This report reveals that the last week of 2011 was the largest week for device activations and app downloads in iOS and Android history.
For this report, Flurry leverages its data-set from over 140,000 apps running on the significant majority of iOS and Android devices. With its application penetration, Flurry can detect over 90% of all new devices activated each day. Additionally, with its analytics service in more than 20% of all applications downloaded on a given day from the App Store and Android Market, Flurry can reliably estimate total iOS and Android downloads. To benchmark against the market, Flurry regularly triangulates its device and download figures with data released publicly by Google and Apple.
In its most recent report, Flurry estimated that a record-breaking 6.8 million iOS and Android devices were activated on Christmas Day, along with an equally record-breaking 242 million application downloads. Studying the data from December 25 – December 31, additional records were set, now for the highest number of device activations and app downloads of any week in history. Over the holiday “power week,” Flurry estimates that over 20 million iOS and Android devices were activated, and 1.2 billion applications were downloaded. Let’s drill down further into the downloads.
The columns in the chart compare the number of app downloads during Christmas through New Year’s Day (on the right) versus the average of the first two equivalent weeks of December (on the left). The seven days from December 25 – December 31 spanned from a Sunday to a Saturday. As such, we take the average of the first two full Sunday-to-Saturday weeks in December to establish a baseline. The average downloads over these weeks are surprisingly even. For background, the third full Sunday-to-Saturday week, not shown in the chart, December 18 – 24, is elevated slightly due primarily to December 24 downloads. Up until the final week of the year, this penultimate week set the download record with 857 million downloads. The final week of the year, between Christmas and New Year’s Day, grew by 60% over the early-December baseline, historically punching through the billion download barrier for the first time ever to deliver 1.2 billion downloads.
This second chart shows the top twenty countries across which the record 1.2 billion downloads were distributed. Starting from the left, the U.S. took the lion’s share with 509 million downloads, or 42.3%. Referencing an earlier report, wherein Flurry sized the current installed base and market upside for each country, it’s not surprising that the U.S. continues to lead the rest of the world by such a large margin. We estimate that just prior to the holidays, there were 109 million active iOS and Android devices in the U.S. market. Compared to the worldwide total active installed base of 246 million, this was 41%. China, the world’s second largest app market, which has roughly one-third of the U.S. installed base saw only one-fifth of the relative downloads. It’s important to note that the celebration of Christmas as a holiday impacted download performance. While the United States widely celebrates Christmas, China is largely non-religious, with over 60% of the population considering themselves agnostic or atheist. In China, Christians make up just 3 – 4% of the population.
Following the trend that Western countries more widely celebrate Christmas – note the higher positions of countries like the United Kingdom, Canada, Germany, France, Australia, Italy, Spain and Mexico in the chart – these countries over-indexed against largely non-Christian countries of China, South Korea and Japan. For example, South Korea and Japan have the 4th and 5th largest smart device installed bases of all countries, yet they ranked 7th and 10th, respectively, for downloads over the record week. Christmas is not recognized as a national holiday in Japan, and in South Korea, roughly half the population self-identifies as non-religious. As a point of interest, Canada appears to have over-indexed the most, using its 8th largest installed base to drive the 4th most downloads over the holiday period.
Looking forward to 2012, Flurry expects breaking the one-billion-download-barrier per week will become more common-place. While iOS and Android growth continues to amaze, the market is still by all measures relatively nascent. We look forward to continuing to chart the unprecedented adoption of mobile computing devices, usage of applications and the way in which this technology is changing consumer behavior worldwide. Happy New Year from everyone at Flurry.
In 2007, Apple and Google started a mobile computing revolution. Over the last four years, adoption of this new class of smartphone has been unprecedented. With powerful devices, connected to broadband networks and rich digital stores, an app economy was quickly built on top of it.
Beginning last year, Flurry observed that consumers using apps began expanding beyond early-adopting U.S. and Western European markets, starting to include more emerging economies. In a previous post, we shared details about this shift, highlighting the fastest growing international markets, with emphasis on China’s extraordinary growth.
As 2011 comes to a close, and we look forward to 2012, we size today’s installed base of iOS and Android smart devices (smartphones and tablets) as well as identify markets where the most future upside exists. We start by looking at how many active iOS and Android devices run applications by country.
Using data collected from Flurry’s data-set of more than 140,000 apps running on smart devices worldwide, we get a snapshot of how many iOS and Android devices ran apps over the last 30 days. Note that we gross up our figures to reflect differences in penetration per platform to provide market-level estimates. Among the top 20 countries, the U.S. still makes up the largest chunk of the world’s active installed base, with 109 million out of 264 million, or 41%.
Of note, China and South Korea now hold two of the top five positions, boasting addressable audiences greater than that of more developed countries such as Japan, France and Germany. Also worth noting is that our count of 264 million active units in the market is about half of what Apple and Google publicly state have been activated. The difference is primarily due to old device replacement. Flurry is counting recently used devices versus life-to-date device activations.
With smart device adoption skyrocketing worldwide, we next look at which markets hold the most future promise. With greatly varying disposable income per country, and recognizing that children do not purchase devices, Flurry used available data from several sources to adjust its data for an apples-to-apples comparison. First we used the “adult” population counts from the International Monetary Fund (IMF), which IMF defines as 15 to 64 years of age. Next, we adjusted our numbers based on the size of the middle class in each country, primarily using a study by Miller-McCune. We finally estimated the size of the upper class per country, who by extension can also afford a smart device. After making adjustments, we are left with adult consumers who have the financial means to afford a smartphone device per country. Doing so, populous countries like India, China and Brazil, which also suffer from income disparity, are not over-estimated in our addressable market calculations.
Starting from the left, China has 122 million consumers who do not yet use an iPhone or Android device, but could afford one. In short, this chart represents untapped potential. Emerging economies – China, India and Brazil – make up three of the top five market opportunities. Over the next several years, as these countries continue to modernize, they will significantly expand the worldwide addressable audience for smartphones.
Bringing the data together, we next look at market maturity, which is the measure of how penetrated smartphone devices are among a country’s addressable audience. To illustrate which markets are most mature, we chart the top 10 countries ranked by penetration.
The vertical axis measures our total addressable audience (TAM), which we define as adults, 15 – 64, who are at least middle-class. The TAM per country is represented by the larger, light blue circles. The U.S., with the largest light blue circle, has the largest TAM at 200 million. The horizontal axis shows percent penetration, which is the active user (iOS or Android device that used an app over the last 30 days) divided by the TAM. For example, Sweden is the most mature country with 3.2 million of 5 million (66%) addressable consumers already using iOS and Android devices. France, which ranks 10th in maturity, has 9.6 million of 34 million (28%) consumers using iOS and Android devices. So, from left to right, penetration increases. And from bottom to top, TAM increases. The U.S. leads the world in installed base because its large, addressable audience has been well penetrated, 91 million of 200 million (55%).
Completing our study, we look at the world’s largest addressable markets, regardless of penetration.
Because this chart measures future potential, TAMs are much larger relative to active user bases. The result, visually, is a lot more “light blue.” Many of the world’s largest countries have largely un-penetrated markets, primarily due to standards of living (emerging markets) or increased competition for consumers’ disposable income (developed markets). In either case, the TAM is there, but the adoption hasn’t yet occurred. So, many of these markets are future bets with the time of maturity somewhat variable and unknown. In this chart, the U.S. has both the largest current installed base and market upside. Again, this is because of its unique, well-penetrated and large, affluent population. Next China, given its very large population (1.3 billion), along with a growing middle class who has already begun adopting smart devices, has the world’s second largest market potential. In comparison, even though India has the world’s second largest population (1.2 billion), its TAM is much smaller than China’s because of India’s very low standard of living. The result is that, even though its total population is not far behind China’s, its total addressable market is. Further, the adoption of smartphones and tablets among its TAM has been small. Finally, Japan, the world’s fourth largest market, has a lot of upside given light penetration of iOS and Anroid devices against its large, addressable market.
iOS and Android sales boomed in 2011, with international smartphone and tablet adoption accelerating. As we look forward to 2012 and beyond, we expect the trend of international expansion to continue. With the world’s estimated middle class now totaling 1.8 billion, there remains a lot of unconquered territory for Apple and Google, who currently lead the charge in driving smart device adoption. This is equally good news for developers, who build apps for these platforms, and directly benefit from their installed base growth.
In this new age of mobile computing, the long-term success of Apple and Google depends largely on their ability to amass third-party developer support. Developer innovation improves the way consumers connect with others, entertain themselves, work, and more, all through apps. The more a platform provider can attract unique and superior content, the more appealing the hardware device appears to consumers prior to purchase and the more loyal they become afterwards.
Last week, Apple reported that it had sold a cumulative 200 million iOS devices. Currently the App Store contains more than 425,000 apps, with total downloads surpassing 15 billion. From the developer’s point of view, the most attractive aspect of the iOS consumer audience is that they all have credit cards on file with iTunes. This means 100% of them can seamlessly pay for apps and in-app purchases. All told, the App Store offers a powerful business opportunity to developers and has attracted leading mobile developer support.
At the same time, Google’s more open Android OS distribution strategy has garnered the support of numerous notable OEMs, spawning a rapidly growing installed base of Android devices that is gunning to overtake the iOS installed base. With broader distribution across more carriers, Android device activations surpassed 500,000 per day tweeted Andy Rubin last month. This growth is up from 300,000 activations per day reported just last December. In terms of apps, the Android Market has 200,000, and Google said it crossed the 4.5 billion downloaded application mark in May.
At Flurry, we regularly track developer support across the various platforms that compete for their allegiance. When companies create new projects in Flurry Analytics, they download platform-specific SDKs for their apps. Since resources are limited, the choices developers make in building for different platforms strongly signal their confidence in those platforms. They are literally investing their R&D budgets in the hopes of generating future revenue. In total, over 45,000 companies use Flurry Analytics across more than 90,000 applications. For this report, we compare Q1 to Q2 new project starts.
Studying the numbers, it’s readily apparent that Android has lost developer support to iOS. Specifically, Android new project starts have dropped from 36% in Q1 to 28% in Q2. Overall, total Flurry iOS and Android new project starts grew from 9,100 in Q1 to 10,200 in Q2. Of note, this drop in Android developer support represents the second quarter-over-quarter slide, which follows a year of significant, steady growth for the Google-built OS. Over the course of 2010, Android developer support had steadily climbed each quarter, peaking at 39% in Q4 2010.
Considering the events that could have precipitated this shift in developer support, Flurry has identified two probable causes:
1. iPhone Launch on Verizon: With iPhone’s arrival on Verizon in February 2011, three and half years after launching on AT&T, Apple closed the most significant vulnerability gap in its U.S. distribution, and likely worldwide. In fact, with its lengthy exclusive distribution agreement of iPhone on AT&T, it could be argued that Apple itself gave Android the opportunity to reach critical mass on other carriers, most notably Verizon. In that time, Google, Verizon and a host of OEMs worked hard and fast to push Android devices as an alternative to AT&T’s iPhone juggernaut. With Verizon’s launch of the iPhone, the pendulum appears to have swung back in favor of iPhone over Android development.
2. iPad 2 Launch: Establishing an installed base of more than 20 million tablet devices in less than one year, the iPad success story has been compared to taking a buzz-saw to the PC industry. Apple’s iPad shipments, from its last disclosed quarter, were higher than the initial first two quarters of iPad availability. Apple has additionally claimed that it is seeing the “mother of all backlogs.” Building efforts lag behind consumer demand for the device. We believe that wholesale consumer acceptance and adoption of tablets, which just a year ago was questionable within the industry, is further luring developers to build for iPad instead of Android.
While Android’s device installed base continues to surge, ongoing work to improve the Android Market layout and to push forward the adoption of Google Checkout are critical to its success. PayPal’s recent acquisition of mobile payment player, Zong, demonstrates that Google may not be enabling consumer payment quickly or well enough, which is inviting 3rd party competition and creating billing fragmentation. Furthermore, the development community is concerned about the rising cost of deploying across the Android installed base, due to the double whammy of OS and storefront fragmentation. With developers pinched on both sides of the revenue and cost equation, Google must tack aggressively at this stage of the race to ensure that Apple doesn’t continue to take its developer-support wind.
Although the Internet entered the mainstream a mere 15 years ago, life without it today is nearly incomprehensible. And our use of the web has rapidly changed as well. In simple terms, it has evolved from online directories (Yahoo!) to search engines (Google) and now to social media (Facebook). Built on the desktop and notebook PC platform, the web’s popularity is significant.
Today, however, a new platform shift is taking place. In 2011, for the first time, smartphone and tablet shipments exceed those of desktop and notebook shipments (source: Mary Meeker, KPCB, see slide 7). This move means a new generation of consumers expects their smartphones and tablets to come with instant broadband connectively so they, too, can connect to the Internet.
In this report, Flurry compares how daily interactive consumption has changed over the last 12 months between the web (both desktop and mobile web) and mobile native apps. For Internet consumption, we built a model using publicly available data from comScore and Alexa. For mobile application usage, we used Flurry Analytics data, now exceeding 500 million aggregated, anonymous use sessions per day across more than 85,000 applications. We estimate this accounts for approximately one third of all mobile application activity, which we scaled-up accordingly for this analysis.
Our analysis shows that, for the first time ever, daily time spent in mobile apps surpasses desktop and mobile web consumption. This stat is even more remarkable if you consider that it took less than three years for native mobile apps to achieve this level of usage, driven primarily by the popularity of iOS and Android platforms. Let’s take a look at the numbers.
The preceding chart compares the average number of minutes consumers spend per day in mobile native apps vs. the web. For mobile apps, Flurry tracks iOS, Android, BlackBerry, Windows Phone and J2ME. And for the web, our figures include the open web, Facebook and the mobile web.
Flurry found that the average user now spends 9% more time using mobile apps than the Internet. This was not the case just 12 months ago. Last year, the average user spent just under 43 minutes a day using mobile applications versus an average 64 minutes using the Internet. Growing at 91% over the last year, users now spend over 81 minutes on mobile applications per day. This growth has come primarily from more sessions per user, per day rather than a large growth in average session lengths. Time spent on the Internet has grown at a much slower rate, 16% over the last year, with users now spending 74 minutes on the Internet a day.
As a note of interest, Facebook has increasingly taken its share of time spent on the Internet, now making up 14 of the 74 minutes spent per day by consumers, or about one sixth of all Internet minutes. Considering Facebook’s recent leak regarding Project Spartan, an effort to run apps within its service on top of the mobile Safari browser, thus disintermediating Apple, it appears Facebook seeks to counter both Apple and Google’s increasing control over consumers as mobile app usage proliferates.
Games & Social Networking Dominate Mobile App Usage
With mobile app usage soaring, Flurry additionally studied which categories most occupy consumers’ time. For this snapshot, Flurry captured time spent per category from May 2011 across all apps it tracks, now totaling more than 85,000. The results are shown in the pie chart below.
The chart clearly shows that Games and Social Networking categories capture the significant majority of consumers’ time. Consumers spend nearly half their time using Games, and a third in Social Networking apps. Combined, these two categories control a whopping 79% of consumers’ total app time. Further, as we drill down into the data, consumers use these two categories more frequently, and for longer average session lengths, compared to other categories. Any way we slice it, Games and Social Networking apps deliver the most engaging experience on mobile today.
With a better understanding of how consumers spend their time across app categories, Facebook’s Project Spartan makes even more sense. As a category, social networking – which is Facebook’s core competency – commands the second largest allocation of consumers’ time. Games, which typify the most popular kind of app played on the Facebook platform itself, are also the top categories on both Android and iOS platforms. As interactive media usage continues to shift from the web to mobile apps, one thing is certain: Facebook, Apple and Google will all expend significant resources to ensure that no one company dominates owning the direct relationship with the consumer.
In 1985, Microsoft introduced the Windows operating system for personal computers. Leveraging a more open partnership model, Windows overtook the operating sytem market, with market share now exceeding 90%. As the 80s drew to a close, IBM had faltered as the world’s most valued brand in computing, leaving an opening for the combination of Windows and Intel, aka “Wintel,” to be associated with value to consumers.
In October 2008, T-Mobile released the G1 by HTC, the first commercially available mobile device running on the Android operating system. For consumers, this marked the first opportunity to use a new kind of handset born of the Open Handset Alliance, a Google-led collaboration of now more than 79 member companies who pledged to support open standards for mobile devices.
With OEMs such as HTC, Motorola, Samsung and LG all adopting the Android OS, the race is on to earn a Wintel-like place in the hearts and minds of consumers. In this report, Flurry reviews the first two years of the Android device market and concludes that the combination of Samsung and Android, or “Samdroid” as we are coining it, has emerged as a new leader in non-iOS smartphones.
Android Growth Explodes in 2010
Through its analytics service, Flurry estimates it detects over 80% of all Android devices. Presenting our own count of Android devices from 2009 to 2010, without any adjustment, the chart below shows how the launch of wave after wave of increasingly more powerful Android devices has resulted in unprecedented year-over-year growth. By our count, devices running on Android OS now exceed 60 million. From 2009 to 2010, Android adoption increased by nearly 10 times, from 5.9 million to 53 million devices.
The New 2010 Android Landscape
In 2009, the leading Android handsets were the T-Mobile G1 by HTC, myTouch 3G by HTC and Motorola Droid. Overall, for 2009, HTC’s early commitment to Android was rewarded. By the end of 2010, however, three companies split the majority of share for Android devices, with Samsung coming on very strong in the second half of 2010. Additionally, LG captured 7% of Android device activations with a surge of Q4 sales. As a new brand in consumer electronics, HTC appeared unable to withstand erosion of its early, dominant market share lead against mature brands like Motorola, Samsung and LG.
Samsung Disruption in Q4 2010
Breaking out new Android device activations by OEM by quarter in 2010, as is done in the subsequent chart, provides a view into how Samsung enters strongly in the back half of 2010. In fact, Q4 2010 marked the first quarter since Android launched eight quarters ago in Q4 2008, with the T-Mobile G1 by HTC on T-Mobile, that HTC did not lead the market in quarterly new Android activations. While HTC enjoyed strong first-mover advantage, coupled with additional penetration through its willingness to white label for Google and T-Mobile branded Android devices, it succumbed to the brand power of Samsung led by its Galaxy S line of Android devices in Q4 2010.
The Galaxy is out of this World for Holiday 2010
Studying the Holiday period in December 2010, not only does Samsung dominate the top position with the Galaxy S, but also claims the third best spot with the Galaxy Tab, the best-selling Android tablet and only non-phone in the top ten. Additionally noteworthy is that the top five does not include HTC. However, it’s also fair to point out that by expanding the list to include the top ten devices, spots six through ten are all HTC devices, in the following order: HTC EVO 4G, HTC Desire, HTC Incredible, HTC Glacier and HTC Wildfire.