iOS Apps Hit 500,000

Just a bit of the entire infographic, showing the top titles...

It's just getting more and more crowded out there on the virtual store shelves. The number of apps approved for Apple's App Store is now over 500,000, with over 400,000 available for download. Good luck finding any particular one, if it's not a best-seller.

I urge you to click through and check out this infographic which is chock full of details about the apps, but it's unfortunately too big to put into this blog post. As you look at the info, remember it covers all iOS devices, and that iPad apps tend to be more expensive than iPhone apps. Some key tidbits:

• There are over 85,000 unique developers.
• 37% of all apps are free
• The average price for a paid app is $3.64
• Of all apps, 29% are 99 cents, and 13% are $1.99
• Games started out as 24% of all apps, and are now 15% of all apps

App Store Marketing 2011

App Stores other than Apple's may be smaller, but they are growing faster.

The whole App Store idea is growing and changing. First off, the phrase "App Store" is the subject of a fight, as Apple's trademark application for the term (filed in 2008) is under attack by Microsoft. Not unreasonably, Microsoft is arguing that the term App Store is generic, like "shoe store", and should be available to all. As you might expect, Apple disagrees. You'd expect Apple to want the term reserved for themselves. It's amusing, though, how fast technology has forced the progression of language. Why, back in the Twentieth Century it could take decades for a company's trademarked term like Kleenex or Xerox to become generic. Now it happens so fast the trademark hasn't even been granted before the term becomes generic.

Anyway, regardless of what you call it, stores that sell Apps have been growing and changing. Here's some interesting data on on various App Stores have been growing in the last year. Blackberry, Android and Ovi app stores have been adding apps at a tremendous rate far outstripping Apple's. Of course, they have far further to travel since they are smaller. And Blackberry and Ovi desperately need apps to compete with Apple and Android, though this seems like a rearguard action that will do little to delay the outcome of the war.

Something entirely different is coming up with the Android app market. One of the interesting things about the Android Market is that Google has always said other companies are free to create Android app markets of their own, unlike Apple who assiduously tries to keep it all to themselves (though Cydia offers some interesting capabilities to those willing to jailbreak their iPhones). Now Amazon is about to take them up on it... and Amazon is planning to change the way apps are priced.

Typically, app developers set their prices and the app store takes a 30% cut, passing 70% of the revenue on to the developer. Simple, straightforward, no muss, no fuss. Amazon, though, has invested a lot of effort into figuring out how to maximize revenue from pricing. Amazon has engaged in dynamic pricing in the past in an effort to maximize revenue. So Amazon is setting up their Android App Market to allow them to do that with Android apps.

Here's how it will work: The developer sets a Manufacturer's Suggested Retail Price (MSRP) for their app; this MSRP has to be less than or equal to the lowest price of the app as listed anywhere else. Amazon will pay the developer 70% of whatever Amazon sells the app for, or 20% of the MSRP, whichever is greater. So Amazon can put the app on sale, or give it away for free if they like. If the developer lists an MSRP of $5, Amazon will pay the developer $1 if Amazon gives the app away for free. If Amazon sells the app for $2, the developer gets $1.40. It may well turn out that the developer will make more money overall by Amazon selling the app for $2 than at the MSRP of $5. (For instance, if Amazon sells 100,000 copies at $2, versus the developer selling 1,000 copies at $5, the lower price is clearly better for everybody.)

Developers may be annoyed at the idea that they won't have control of their price, but clearly Amazon's interested in finding the maximum revenue, which is good for the developer as well as Amazon. Pricing digital goods is not the same at all as pricing physical goods. I think Amazon's going to be very successful with this idea... if developers will get past their prejudices and put apps into the Amazon app store despite losing total pricing control.

Marketing Android Games

If you thought marketing iPhone games was hard, wait until you tackle the problem of marketing Android games. The same basic problem exists in both markets: There are tens of thousands of games vying for attention, and there's very limited tools built into the app markets for finding your game.

The Android app market, though, has bigger problems than just numbers. Here's an excellent blog post on the Android market's problems, which I found via Gizmodo. This developer notes some of the key issues for Android developers, which is that they're just not making much money for the most part. The problems with the Android market can be seen in some very simple things, such as this: Where are the killer apps? If you look at the top apps for the Android platform, most of them are also available on the iPhone. Most of the rest are system-support type things, like anti-virus or system hacking tools. If you've been in the game industry for a while, you know the power of system exclusives. How much has Mario helped Nintendo sell hardware? How much has Halo helped Microsoft? It's hard to even say where Nintendo would be if it wasn't for the little plumber. And if you took away all of the impact of Halo, would the Xbox and Xbox 360 have been very successful?

Yet the Android market doesn't seem to be attracting many exclusives, despite the fact that sheer numbers seem to be looking pretty good for Android.

The latest Comscore numbers show that Android has just about the same market share as Apple in terms of subscribers in the US market. The Android is closing in on Apple as the phone platform most desired by potential buyers, too.

Look at the numbers from Nielsen's latest survey. The Android platform is almost as desired as the iPhone platform among likely smartphone upgraders. Wow, that all looks great for Android developers, right? If only. Revenue for the iPhone platform is many times higher than Android. Why the disparity? It's in the details. The marketplaces are just not comparable in interface or in ease of use. The Android Market is clunky, ugly, and bereft of even the limited ways the App Store provides to find and suggest apps to customers. At least the Android Market has finally introduced a Related tab to provide some suggestions for customers looking for apps. A step in the right direction, but there are still miles to travel. Hot picks? Lots of categories to make it easier to find what you're looking for? Sort by user ratings? No, aside from a few of the top titles, you're going to have to know about your Android app's existence before you go hunting in the Market for an app. This is not designed to help small developers sell products.

Speaking of which, the Android is not helping much with the freemium model. That's the model where less than 2% of the apps in the App Store are generating 30% of the App Store revenue... yet it's not something you can readily do on the Android platform. I know there are plenty of bright people at Google, and surely some are aware of this, but perhaps it's too hard to herd the engineers in the direction of making such improvements.

So some Android developers (or potential Android developers) are looking to get their apps paid for by Verizon or some other carrier and pre-installed on the phone. They may not get very much per unit, but at least it's something. Not a business model that works for everybody, though.

The Android Market needs to get a makeover, either from Google or from somebody else. Perhaps a third party can create a functioning app market where Google doesn't appear to be all that interested. Maybe the Android tablets already swarming to the storefronts will help catalyze the development of a well-done marketplace. Apple needs some good competition on the software and business model end of things, not just on hardware.

Meanwhile, marketers looking at the Android marketplace have to try even harder than on iOS. More social media, more ads, more PR, a better hook. You cannot count at all on the internal Android Market tools to help users find your game. You have to find an audience outside and bring them in.

New Apple Numbers Smashing Records

Apple has announced its numbers for the quarter ending September, and they are eyepopping. They hit a record $20 billion in revenue, with a profit of $4.3 billion. They sold 14.1 million iPhones... and they could have sold more, only they couldn't build them fast enough. Meanwhile, they also sold 9 million iPods and 4.2 million iPads (oh, yes, and Mac sales hit 3.9 million, a 27% increase).

Some very interesting information came along with this. First, the App Store has hit 300,000 Apps (for comparison purposes, the Android Market is over 90,000 Apps). Second, the number of iOS devices out there has hit 125 million, which is getting pretty darn close to the number of Nintendo DS units out there (132 million as of June). Clearly, given the respective sales rates, Apple will easily pass Nintendo's installed base this next quarter, and never look back no matter how well the 3DS does. Third, the iPad has become one of the fastest-selling gadgets ever, if not the fastest. Some analysts were disappointed Apple didn't sell 5 million, but there were supply constraints.

Oh, and Apple managed to sell over 9 million iPods, too, though that number was down 11% over last year. Probably had to do with the transition to the new iPod based on the iPhone 4. The new Apple TV sold 250,000 units, though of course it didn;t have very much of that quarter to work with. Still, it managed to match the Wii in sales for that month. (Wait until Apple puts the App Store on the Apple TV, then the floodgates will open.) Plus, Apple said they had hit a peak of 300,000 iOS product activations per day, handily beating Google's 200,000 per day. Apple also casually mentioned that Blackberry sold 12.1 million units in that period... the iPhone has now blown past the business leader. The iPad is making strong inroads into the business market, which is surprising to some people. Netbooks, notebooks, and consoles are all beginning to feel the impact of the tablet revolution, which is only just beginning. Note that the iPad-specific apps number over 35,000 and climbing.

What can we expect in the next year? Their numbers will only look better. Assuming Apple can get over their supply problems, they should be able to maintain their iPhone sales at least at that level. The long-rumored Verizon iPhone may actually appear next year, and if it does those numbers will climb higher. We should be seeing at least 5 million iPhones every month, maybe more. The iPad will probably hit close to 2 million per month. The iPod Touch will probably be 2 million per month. The Apple TV may even hit 1 million per month once it gets an App Store.

Consider, this, too: Apple is now the second largest company in the world by market capitalization. Their sales make them bigger than Microsoft, and in the upcoming quarter they'll beat Google and Microsoft, too. Cash in the bank is close to $50 billion... which means they can acquire whatever they feel they need to in order to increase their business. If they want to spend a bit more on marketing in any category, they can overwhelm any competitor.

Those numbers put the entire console business in the dust. No wonder sales are down. Will console makers figure out that their business model needs to change? Will Microsoft somehow get it together with Windows Phone 7 and the Xbox 360 and the Kinect to make a solid family room competitor? Can Sony put together a PSP2 and an online media store connected to the PS3 that will offer a compelling alternative? Will Nintendo finally create a successor to the Wii and reinvent their WiiWare and DSIWare stores? Or is Google the only effective competitor left?

App Store Success Story

If you're looking for a way to succeed in the App Store, you should take a look at what happened with Hungry Shark. This blog post on GamesBrief lays it out very nicely; the game had done very well in the UK as a paid app (250,000 copies!) and they wanted to take a big bite out of the American market. So they introduced it as a free game during Discovery Channel's Shark Week, and it hit the #1 spot for six days in August. Now they're moving 250,000 copies per day as a free app. So what, you say? Well, about 7% of those go on and pay 99 cents for the full version.

If you're doing the math, after you take out Apple's 30% cut, they're raking in a cool $12,000 or so. Every day. Pretty good for a free game, isn't it?

Note, though, you have to have a damn good game to start with, with good production values. They were clever enough to tie in to an external event that provided a PR hook, and they pushed the connection. They were clever enough in the design that they could create a free version that was fun, and there was enough impetus to get a reasonable number of conversions to the paid version.

Could this be duplicated? Yes, but more likely is that you'll have to work on each piece of the puzzle for a while to make it happen. Your conversion rate may be very low, so you'll have to tweak the design or improve the added value to boost the conversion rate. Using the analytics provided by someone like Flurry you can improve things based on what users are doing. Getting the word out to all the right web sites, getting the review copies in the right hands... orchestrating the buzz is very important.

Still, it all starts with a good game at its core. Marketing can help a good game succeed, but in this era of widespread information and reviews a mediocre or poor game won't make it, no matter how much rich creamy marketing you put on top.

The old market of packaged goods in retail stores, where an EA exec once famously said "We could sell dog shit in a box", is going away. Good riddance. Now you have to have a good game, and good marketing, to succeed. The customers are better off being surrounded by good quality games.

App Store Stats

It's hard to find good numbers on apps sometimes, so this article is a welcome find. You won't be surprised to learn that there are now over a quarter of a million different apps... and that games are the second largest category (books being the largest). This chart breaks down the apps by categories, and shows the price distribution. You won't be surprised to learn that the Free and 99 cent categories are the biggest (but there are over 86,000 apps at 99 cents, slightly more than the 80,000 free apps.

It's really impressive to note that this has all occurred in two years. What will it look like two years from now? I'd venture to guess that we'll see far more apps, making marketing even more important. Pricing may shift higher, unless advertising generates more revenue than it has so far (such a pricing shift may also be driven by the iPad apps, which are priced higher in general). I predict we'll also see an App market on Apple TV, which will spark explosive growth of that platform much as it did for the iPhone.

I wish I could say we'll see significantly improved App Store organization and search tools to make it easier to find apps, but I'm not holding my breath. I'd love to be pleasantly surprised, though. Apple? Anyone listening there? I wonder if you could sell search terms in your App Store...

Free Apps! Why?

Many developers are giving away their apps for the iPhone or Android markets, as this article shows in detail. In fact, the Android market is 57% free, while the iPhone market is 28% free. (The average price paid for an app is about $4, though this is skewed by some rather pricey apps at the high end.) Why should developers give away their hard work, and why should you consider it too?

Marketing is the answer. Standing out in a forest of 225,00+ apps (iPhone) or 70,000+ (Android) is difficult; there are almost certainly several apps that do pretty much the same thing as yours, and if there aren't, and yours is a good idea, there soon will be. People are more likely to try your app if it's free. But how do you make money if it's free?

The free version is usually a demo of some kind; there's almost always a paid version with more features available. The hope is that you'll try the free one, like it, and then pay a few bucks to get the better version. A variation of this is free-to-play; you can play the game for free as much as you like, but there are in-game items (such as a better weapon) available for money. Only a small percentage of players pay for those, but it's enough to pay for all the rest of the players.

Some free titles don't have a paid version. What's up with that? Sometimes it's just to be funny (like the vuvuzela apps that showed up). As a marketing tool, such a free app can be a useful way to get your name out there and possibly bring people in to your web site and other ways for you to make money. A popular version of this is the business that has a free app in order to encourage your use of their services; banks, for instance.

Of course, some apps are free because they are supported by advertising. So click on an ad once in a while if you like a game; you'll be helping them out.

Consider how a free app might help out your business model; consider it as another marketing tool.

App Bonanza Expands

As I write this, Steve Jobs is busy telling developers about the new iPhone, and it does sound pretty cool. But the real news that should be getting you excited is not the new hardware, nor even the advent of Farmville for the iPhone. It's the state of the App market. Now there's 225,000 Apps in the App store, and they just crossed 5 billion downloads... and have paid out over $1 billion to developers. Plus, while Apple was showing stats on the growth of the iPhone and its App market, they were showing numbers about Android. They interesting thing is how Windows Mobile, Blackberry and Nokia are shrinking, while Apple and Android are growing at an amazing rate. Why does this matter? Because Apple and Android have easy App markets to get into, and by far the highest volume of App sales... so that's where the money is for developers.

New Android phones are getting pretty amazing, and it's nice to see sharp competition between Apple and other hardware makers. The result is the market for Apps of all flavors is growing fast. Interestingly, there is only a 5% overlap between iPhone Apps and Android Apps, according to Flurry (the leading mobile analytics firm). This surprises me... app developers are missing an easy way to expand their sales. Do an iPhone app, then port it to Android, or vice versa.

And all this App frenzy is even without counting the 2 million iPads sold so far (one every 3 seconds now), and the 17 apps per iPad that have been downloaded to this point. Oh, and PDFs are now part of the iBookstore... and the iBookstore is accounting for 22% of ebook sales from major publishers. Plus they are now allowing individuals to put ebooks up for sale. And the iBookstore (complete with PDF support) is coming to the new iPhone OS 4. So individual authors can now make their ebooks available to the 100 million iDevices out there, or will be able to soon.

Rumors have already started to emerge that Apple TV is going to get completely redone... as an iPhone type device, using that operating system and ecosystem. Imagine being able to buy games and play them on your TV... as Apple finally cracks the console market and completely upends that business, while opening up chances for small game developers to finally reach a huge audience. And did I mention Google TV, which has already been announced and is planning essentially the same thing? I wouldn't want to be Sony or Nintendo or Microsoft right now. They're going to be in LA in a week trying to get the world excited about what's coming for consoles, and meanwhile the world is changing in fundamental ways that they don't address.

Marketing is going to be even more key to this future...

App Advice from Flurry, Mobclix, Getjar

Yesterday I attended a panel discussion about marketing mobile apps, which included some interesting data from Flurry and Mobclix. ONe thing all the panelists agreed upon is that there is no one strategy that works for all apps; companies are trying different things, and no one has a magic formula that always works. SOmething that was clear to them, though was that the first month was a very good indicator (usually) of how an app would perform over time. If you didn't become a hit then, your chance of becoming a hit was much less later on. Not impossible, just much less likely. So your marketing should be planned for maximum effect in that time frame, or else it may not have as much impact.

Also interesting were the numbers on Android. The iPhone is still the big dog, but Android seems to be growing well also... both are eating share from Windows and Blackberry. Nokia who? Microsoft is anticipating sales of 11 million units of Windows 7 Mobile by the end of 2011... there must be something in the water in Redmond. Android's problem is the multiple versions, which make it difficult to support with one app. One thing I found most interesting is that most developers seem to be developing for one platform only; there's only a 5% overlap between iPhone and Android apps. Really? Seems like a missed play to me.

Finally, since 87% of app downloads are of free apps, that seems like a powerful marketing tool. You are left with the difficulty of monetizing your app, which needs to be considered from the beginning of the design process to really be effective. Advertising may work well, but for games the freemium model seems to be really popular.

Apple's Fixing Things

Apple is trying to clean up its act a little bit, apparently. First off, they've fixed the way they screwed up the App Store for iPads. Now you can actually find all the games for the iPad. Though the fundamental difficulties with the App Store still remain. There are too many products for the interface; unless you already know what you're looking for, you won't find it unless you get lucky. And let's not even talk about the categories and how the games in them don't belong there...

Meanwhile, having come under fire for blocking third-party development tools from being used on items for the App Store, Apple is quietly looking into altering their developer agreements. But this may be too late to stave off an anti-trust investigation. Oh, and questions are being asked about iAds and whether that may be an anti-trust violation because of its restrictions on data sharing.

All of this in the shadow of Apple's announcement that they've already sold 1 million iPads in less than half the time it took them to sell 1 million iPhones.

It's a tough market, but a growing one. Having now played with an iPad for a while (my wife got one for work), I do believe it has a bright future. I guess HP and Microsoft agree, since they've canned their slates that were originally looked at for this year. Back to the drawing board... Apple's changed the battlefield.

It Was Broke, and They Made It Worse

So the iPad comes out and Apple takes a stab at revising the App Store. Good, you think... the App Store has never had great tools for finding games, developers game the hell out of the comment system, and now that there are more than 50,000 games finding anything not on the top 100 lists is purely by luck (or knowing the name from somewhere else). Ah, and the iPad arrives, and games are the single largest category for iPad-specific software. Excellent, Apple is right on top of things, they're going to revise the App Store before the situation gets out of hand...

And then you see what they've done. No more sub-categories, just some filters showcasing What's New and What's Hot. Excuse me? Did all of the creativity and thought go into the hardware, and then when it came to the App Store you just decided to be stupid? We need more ways to find games, not fewer. We need the commenting system improved. We need to be able to find an RPG without having a category stuffed full of pseudo-RPGs that are come-ons for social network games.

Look, Apple, I know you feel that it's up to the developer to sell their app, and you're just a store. But come on! Throw us a frickin' bone here. Even stores offer tools and programs for companies trying to sell things in their stores... shelf talkers, end caps, co-op ads in fliers, coupons... I sure hope iAd is a lot more thoughtful than what you've done with the App Store. Because it's broken, and you're making it worse, and as more apps pour into it, it's gonna get worser. (Somewhere, an English teacher just had a coronary.)