Canalys: Android apps cost 2.5X more than iPhone apps
The top 100 paid apps total $374.37 on Android Market, $147 on the Apple App Store — Here's a puzzler. — Although conventional wisdom has it that Apple (AAPL) iPhone users are more inclined to pay for apps than the owners of Google …
Context & Ripple Effects
This Canalys datapoint lands nine months after Fortune's May 2011 analysis of why developers struggle to earn on Android than on Apple's iOS — a piece built on the then-conventional wisdom that iPhone owners simply pay more. The new finding complicates that story: the top 100 paid apps cost $374.37 on Android Market against $147 on the App Store, so Android users pay more per app even if fewer of them buy at all.
The pickup was broad for an analyst note — eight outlets including PC Magazine, TUAW, PadGadget and Phone Arena ran it the same week — because it touches Google's sore spot at that moment: the company had just won U.S. approval for its Motorola Mobility acquisition while Google Music was reported to be underperforming despite marketing access to some 200 million Android users.
First-order effects
- Android developers are pricing their top paid apps at roughly 2.5X their iPhone counterparts, a direct attempt to extract enough per sale to offset weaker purchase volumes on Android Market.
- Buyers comparing platforms see a sticker-price gap — $374.37 versus $147 for the same top-100 basket — which undercuts Android Market's value proposition exactly when Google is trying to build consumer spending habits there.
Second-order effects
- The pricing gap gives Apple ammunition for its developer pitch: if Android sellers must charge 2.5X to make comparable money, the rational allocation of premium development effort tilts further toward the App Store.
- For Google, the finding compounds its content-commerce problem — a storefront whose goods look expensive sits alongside Google Music's failure to convert its own installed base into paying customers, pressuring Google to fix discovery, gifting, and carrier billing rather than just user counts.
Third-order effects
- If the pattern holds — Android winning downloads and device share while iOS concentrates actual spending — the app economy structurally splits into a volume platform and a profit platform, forcing stores to compete on monetization infrastructure rather than catalog size.
- Sustained price divergence also invites scrutiny of what each store's cut buys: developers may increasingly treat the two marketplaces as different businesses with different price books rather than ports of the same product.
The trend: The mobile app economy is bifurcating along a volume-versus-spend line, with Android supplying scale and the App Store supplying revenue — and pricing data like Canalys' is becoming the evidence base for how developers allocate effort between them.