Enterprise Software Development

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Is Android’s Youth Why Revenues Are Lagging?

Every new platform has to start somewhere, and find a niche. RIM successfully launched the BlackBerry platform into businesses and then transitioned it out to the consumer space when business users realized how much better the platform was than the other mobile offerings at the time. Apple decided that the high-end user was the place to be and have successfully been pulling customers up into the high-end space that weren’t sure about spending that much money on a cell-phone in the past. But what about Android? With 60% of Android users under the age of 35, is Android’s niche a less valuable as a low-income niche or more valuable as a prized advertising demographic?

The vast differences in the direct revenue generated on the Android Market has been well documentedd. Whether you look per user, per app or per device, Android has lagged far behind Apple and RIM in generating direct revenue for developers. Even if you account for the significantly lacking customer and developer experience in the Android Marketplace (granted, there have been good changes recently to improve it), there’s still a gap in the generation of revenue for Android users over other smartphone platforms. There’s a few ways to account for that:

1. 60% of Android users are under the age of 35 — and 32% are under the age of 25. 31% of smartphone users between the ages of 25-34 have never downloaded a mobile app. 46% of smartphone users making < $15k and 33% of smartphone users making $15k-$35k have never downloaded a mobile app. How much money were you making when you were under 25 years old? The Android users simply skew younger and less affluent than on BlackBerry and iPhone — and remember, these percentages are for all “smartphones” so the age shift in Android users will likely skew the numbers even worse as they are buoyed up by the high-end users that answered the survey.

2. 45% of Android users say Android is their first smartphone. Most people I know (who are not techy) that have gotten their first smartphone are conservative on the data plans they get. The cost is higher and they want to try it out first before upgrading. Lower data plans means being more conservative about downloading apps. Also, the rush of getting a new phone and seeing the breadth of free apps available tends to push off the “spend money” decision until the good free apps have been exhausted.

3. In-App Purchasing is new to Android. Google only recently launched in-app purchasing and that feature has been driving a TON of sales on iPhone. Most of the top-grossing games on the App Store are freemium games that leverage in-app purchases to generate their revenue.

Does this mean you should not consider Android as a major driver of business for your app or service? No. What it means is you have to think different on Android. Different business models, different applications and different strategies can all work better or worse on different smartphone platforms. An app aimed at under 25-year olds with interstitial ads might drive higher per-view rates than on iPhone (for example) but a business focussed app for ages 35+ is probably better suited for BlackBerry. Sound obvious? Maybe, but many people mistake the smartphone platforms as being equal (well… at least they do for Android and iPhone) but identifying the differences can create areas you can exploit and Android’s youth can be turned into your advantage.

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