Can Free Apps Sell Games?

GetJar is trying a new gambit in an effort to generate more app sales. They've implemented the GetJar Gold store, where they've taken 50 top Android apps and offered them for free. It's "free app of the day" on steroids, and represents a serious effort to draw some attention away from Amazon's app store. The 50 titles available at launch include such hits as Fruit Ninja THD, Pocket Legends, and Age of Zombies.

The developers of these games will get paid by GetJar, so it's not a bad deal for them. GetJar plans to generate revenue from GetJar Gold by offering sponsored listings to other app developers. Developers can bid from 1 cent to $1 or more for each install they get by being listed. Sponsored apps are shown with a different color coding alongside the high-quality free apps.

It's a clever method to entice a horde of buyers in by offering high-quality free apps, and while they're busy downloading some of those, customers will be seeing other apps they might never have found. It will be interesting to see how well the model performs.

These days, though, small developers should be happy to have some new way to try out in order to find more customers.

Who's Spending Money For Freemium Games?

The 18-24 crowd spends more time, but the 25-34 crowd spends 3x the money.

That's a key question for mobile game developers. At least, it should be if you expect to maximize the revenue you get from the freemium game you're developing. (And if you're a mobile developer who's not working on a freemium game, you're missing out on more than half the revenue produced by mobile games.) Mobile analytics firm Flurry has some data for you.

The data was gathered from a sample of iOS and Android freemium games with over 20 million users across more than 1.4 billion sessions, so I think most people would agree that's a statistically significant sample to look at.

From the chart you can see that game usage skews heavily towards the younger audience, which shouldn't surprise anyone. I'd also guess that smartphone usage tends to follow a similar distribution, with the over 55 crowd being the least likely to even have a smartphone, much less play a game on it. However, the money is definitely coming from the older audience; teens don't spend much at all on freemium games even though they play a lot of them. The real pot of gold lies with the 25-34 age range (spending nearly half the money) and with the 35-54 group (spending more than a quarter of the money). If your game targets those older spenders, you could make more money with fewer overall downloads.

This is important data as you consider the design of your game, the style of the artwork, and the marketing. If you're interesting in maximizing your returns, you need to consider the realities of the marketplace.

The Amazon Tablet Vs. iPad 2

No doubt it won't look like this.

We are fast approaching the holiday selling season, and if Amazon is going to launch an Android-based tablet they'll have to act soon if they want to maximize their initial sales. A number of rumors have been making the rounds about these tablets, so I thought I'd round them up and provide my own thoughts.

Why is Amazon's entry into the Android tablet market important? Primarily because nobody has succeeded in creating an Android tablet that comes anywhere near the iPad in terms of sales. The closest is perhaps Samsung's Galaxy Tab, but even that is a distant second. Apple's managed to combine a smooth interface with a solid combination of hardware that other manufacturers are hard-pressed to match at Apple's price points. So there's an opportunity here for Amazon to use its advantages to secure a leading position in the Android market, and provide a credible threat to Apple's dominance. More competition is good for consumers, and tablets are an important market for games and books and other media.

The rumor mill is buzzing that Amazon is aiming at the low end of the market, planning to undercut Apple's prices. I think this is where the opportunity is best for Amazon; analysts think they could sell 3-5 million tablets in Q4 alone.. The trick is to give people the features they desire at a price they can afford. How can Amazon achieve this?

Here's my advice: Minimize the feature set to keep the costs low. Amazon is said to be using only a two-finger-capable multi-touch screen, instead of the ten fingers an iPad or a standard Android tablet can handle. Remove the cameras; this tablet will be for consuming content you buy from Amazon, not taking pictures. No need for a really fast processor, either, or for lots of flash memory. Give it a memory card slot and let users pay for extra storage. The target price should be $299 or less. Perhaps sell a 10 inch tablet for $299 and a 7 inch tablet for $199. Make the interface smooth and responsive, and provide a good selection of apps. The screen needs to be good... maybe one of those hybrid E-Ink and LCD screens, giving you the best of both worlds?

Amazon's goal should be in selling lots of content. They have a clunky interface, but a terrific recommendation engine. They've certainly encountered some problems with their version of the Android market, but here's a chance for them to fix the problems.

The key feature is going to be Amazon's vast array of media and their ability to suggest things to buy. If the price is low enough, millions will take advantage of it. Amazon has its doubters, though. Others see how Amazon could be a huge winner. It all depends on the execution. Amazon will really need to get these tablets out in October or earlier, and have some big TV advertising buys planned. The hardware, if it really is by Samsung, should be high-quality. Amazon has shown they can produce a good piece of hardware with the Kindle. (An interesting question here is whether Amazon stays with the Kindle brand, or creates an entirely new name... I'd bet on a variation of Kindle. Why not build off of the success of the Kindle?)

This tablet (or tablets) could represent an important expansion of the tablet market next year. Amazon could capture the #2 spot behind Apple, and put pressure on other Android tablet makers to step up their quality and pricing. Of course, Apple already has a plan to deal with whatever tablet threat might emerge. I'm sure they plan to introduce the iPad 3 next year, with a Retina display (4x the current resolution), better cameras, and a significantly more powerful processor. At the same time, they'll reduce the price of the iPad 2 to counter   any threat there might be at the lower end of the market. Oh, it's going to be an interesting marketing battle next year...

What Googorola Means To Games

The acquisition of Motorola Mobility this week by Google, for $12.5 billion dollars, caught most observers by surprise. The primary reason is, ostensibly, the treasure trove of patents that Motorola possesses. Google's Android has come under fire, or rather manufacturers of smartphones and tablets using Android have come under fire, for patent infringement; Apple is attempting to get some nice settlement from Samsung over patent infringement, and is working to get injunctions against their sales. Microsoft has also been getting some payments from manufacturers for infringing on their patents. This sort of patent fighting goes on all the time in the high-tech business, and the only way to get around it is to have a pile of patents of your own. That way you can cut deals for mutual use of patents, and everyone avoids lawsuits.

Google will now have an array of patents that rivals its opponents, and thus should be able to defend itself and its Android partners from legal attacks. Google has so far maintained that just because Motorola has something like a 30% market share for Android devices, other Android partners shouldn't be concerned. Google plans to be hands-off with Motorola, and not give them favored status with Android releases or other special treatment.

Google may believe that right now, but the advantages of producing both hardware and software will ultimately prove too seductive to resist. Apple seems to be doing pretty well with that combination, and the weaknesses of Android have been in the integration of hardware and software... which Google should be able to solve now. Also, Google only makes about $6 per Android phone from the ad sales, since they charge no licensing fees. Apple makes hundreds of dollars in profits from the phones they sell; don't you think Google will want to get some of that action?

What does all this mean for games? Probably not much right away. In the long term Google may use its Motorola set-top box position (Motorola is one of the leading makers of boxes for cable services) to leverage Google TV into more households, and thus provide a big opening for games in the Android Market. I expect improvements in the Android Market, but that probably would have been happening anyway.

It'll be interesting to see if Motorola phones start getting special Android features before other hardware makers, but I wouldn't expect anything like that right away. Will we see other hardware makers back away from Android? Perhaps if somehow Microsoft can make Windows Phone 7 more attractive... but with Nokia in hand, other makers may be reticent about putting more effort into WP7.

The Motorola-Google deal probably won't affect gamers much in the near term. By 2012, we should see if Google can work Google TV into the standard set-top box; if they can, the impact on gamers could be huge.

Android App Users Less Adventurous

If you're not in the Top 50 Android apps, you're nowhere.

Smartphone users spend more time in apps than on the web.

The hidden weakness of the Android platform is that developers are having a hard time making money; even harder than on the iOS platform. Which is not what you'd think given that Android has the bigger market share, but it's due to the behavior of the customers. Here's a new study from Nielsen that gives the sad data: 61% of the time spent on Android devices is spent in the top 50 apps; 43% of the time in the top 10. That's an extraordinary concentration of time; it means that if you're not one of the top apps, you're pretty much invisible. Which explains why developers are still targeting iOS first; it's where the money is. At least, iOS users appear to be more adventurous about trying out other apps.

Both the App Store and the Android Market need to have better discovery tools if app developers are going to have a good chance to make some money. Clearly, though, Android has bigger problems. Developers can help by creating better apps, and by encouraging cross-app marketing. Google also should put some effort into encouraging users to try a wide variety of apps, perhaps through some marketing efforts. I see that Apple continues to advertise apps on iOS, where Android partners all seem to focus on their hardware. Google should step in and spend some marketing dollars showcasing various apps.

In the meantime, developers will continue to be pretty much on their own when it comes to getting customers to buy their apps.

Controllers For Android

It seems like only yesterday that I was saying it wouldn't be hard to get a classic videogame controller to work with a smartphone... in fact, it was yesterday. Today, here's the proof: some clever developers at Dancing Pixel Studios have an app that lets you use your Sixaxis or DualShock 3 controller with and Android phone. Yes, there's some hoops to jump through in order to make it work. As the saying goes, though, it's not how well the bear dances; the remarkable thing is that it dances at all.

This technology demonstration shows that we are on the verge of smartphones replacing consoles. Console controllers can now be used with smartphones; smartphones can output their video to a TV; this sounds like a videogame console to me. The only questions now are the hardware performance and availability of software. Sure, sure, the technology has to be made simple and seamless, but that won't take all that long. By the time smartphones are equal in processing power to current consoles (another year or two), the control and output issues should have been solved for a long time.

Within the next year, I bet we'll see a major software publisher announce plans to port a major title to smartphones, and not just a dumbed-down version, either. Once that happens, there will be a flood of such titles. The current console makers have to be ready for what happens after that...

GetJar vs. Amazon: Android Markets Battle

Cut The Rope goes exclusive to GetJar... for six whole days.

While developers have had a hard time making much money on Android titles, Android Markets are still competing to see who's going to be the best at distributing Android apps. One way for them to compete is by signing exclusive deals with developers. If you're the only place to get Angry Birds, you're going to get a lot of traffic. GetJar had its traffic spike 10 times normal after it was the first place to get Angry Birds for Android, and they had 1.9 million downloads of the title in a few days. That's what Amazon did with Angry Birds Rio, as well as Plants Vs. Zombies, and it bought them a lot of traffic.

Which is why GetJar got themselves an exclusive to Cut The Rope, the  iOS title that's hit the coveted No. 1 slot in the App Store, which now is coming out for Android... exclusively on GetJar. Well, exclusively for six whole days before it appears in the Android Market. That doesn't sound like much of a window of opportunity, which is no doubt why GetJar plans to promote the game heavily in that time frame.

Of course, we don't know what deal the developer got from GetJar for this exclusive. Nothing succeeds like success; only the #1 games are going to get these kind of promotional deals. Though GetJar is trying to play nice with developers and promises them far more opportunities for promotion and marketing than they'll get with other markets. No doubt true, since most other markets do little or nothing at all. Except Amazon, which is trying to set a new standard for app markets.

I expect we'll see more marketing "opportunities" being offered by markets to developers, such as discounts, advertising, and so on, as ways for developrs to try and gain a little visibility in the seemingly endless sea of apps. (When you want to be found, and you're one of hundreds of thousands of products, you do have to find a way to get noticed.) Some of these "opportunities" may in fact be good ones... some will just be a way to throw money away. I hope to find out which is which before spending anything...

Android Market Share Jumps, Blackberry Sinks

Nielsen's numbers look very similar to Comscore's.

April's Comscore report on US smartphone market share, which echoes the Nielsen numbers, continues the trend we've seen over the past year: Android market share grows (up over 5% since January, to 36.4%), Apple's share grows a little bit (up 1.3% to 26%), and RIM's Blackberry market share heads for the depths (dropping 4.7% to 25.7%). Congrats to RIM, they now have a solid hold on third place and can look forward to fourth place if Microsoft succeeds in its alliance with Nokia to boost Windows Phone 7 into competition. Nokia had better get busy, though. Apple and Googl are rapidly moving targets, improving both their hardware and their software regularly. Nokia and Microsoft have to really come from behind.

At this point I'm not sure what features Nokia could really put into their phones that would significantly differentiate them from their Android and iOS competition. Nokia knows how to build sleek phones with good screens, but so do a lot of companies now. Even Nokia's volume advantage is not in play here...Apple's got huge numbers, and so do a number of Android phones, and it will be a while before Nokia could even match those volumes, let alone pass them significantly. So I don't see any price advantage on the manufacturing side.

Which leaves the software side for the advantage. Microsoft has an interesting interface, but they are woefully behind in lining up developers, much less a library of killer apps. Apple has a long lead in cutting deals with major media companies for content. What's Microsoft got aside from Xbox Live? Not much, honestly.. oh yeah, they have Skype now. But they wouldn't try to make that proprietary... it would kill most of the value of Skype. Still, Microsoft is trying hard, and they do have a lot of money to throw at the problem. They may come up with some competitive apps.

Meanwhile, Android continues to grow... but developers continue to struggle to make money on the platform. Apple continues to grow its market share slowly, but they seem to be a much better place to make money for developers. I suspect that new announcements for Apple at their developer's conference this week may help their growth numbers. Rumors continue to swirl about what to expect in the next iPhone, whether it may be a less major update than the last one. The more important thing to Apple's overall growth in iPhone numbers is going to be pricing. I'm sure they'll introduce a new iPhone at the high end of the price scale sometime this year. Will they then move the iPhone 4 down to a lower price? Probably, and that could mean a substantial boost in numbers. If Apple does indeed introduce a new iPhone designed to be smaller, lighter, and less expensive, that could also be a big boost.

Mobile Graphics Power Approaches Consoles

If you need any more proof that the graphics power of mobile chip sets is approaching that of current-gen consoles, check out the video above from Nvidia's Project Kal-El, a 4-core version of the Tegra dual core mobile CPU. You can expect to see this coming to Android tablets later this year or early next year, I'd guess.

I expect Apple will be responding with their own 4-core chip in the same time frame. They're not going to give up their current 85% tablet market share without a fight. These quad-core chips will also be making their way into smartphones, of course, as well as the new crop of TV-connected devices that should be taking over family rooms near you. These graphics look to well exceed the current Wii graphics; no wonder Nintendo's busy getting a new console out there.

Minecraft Junkies Rejoice

Minecraft has garnered plenty of fans so far, over 1.6 million of them, and it's still in beta. Now there's news that Mojang (developer of Minecraft) is bringing the game to a mobile platform... exclusively to the Experia Play, AKA the PlayStation Phone. Well, I'm sure this will get onto other smartphone over time, but at least for a while it will be an exclusive. Mojang will be showing this off at E3. A nice coup for Sony to bring attention to the phone, and the whole PlayStation Suite concept (PS titles on Android phones), and distracting the press form any little minor security issues they may want to talk about at E3.

Real App Sales Numbers

Check out the larger version here.

Getting real hard numbers on how many apps you're likely to sell is difficult. Distimo has just provided some real solid data on how many apps developers really sell on the Android platform, and some numbers for Apple, too. There are some discouraging numbers in there. Like this one: Almost 80% of all paid Android apps have been downloaded less than 100 times. Even among free apps, almost 20% have been downloaded less than 100 times.

This shows how few paid apps are sold; larger version here.

While you can indeed move a lot of apps, it isn't that common an occurrence. Looking at paid apps, there are only 5 games in the Android Market with over 250,000 downloads; by comparison, the App Store had 10 games that had over 250,000 downloads in the last two months alone. Even though the App Store has over three times the paid apps that the Android Market does, clearly iOS users are more likely to spend money on apps.

Here's reality: Some 96% of Android apps sell less than 1,000 units, and most of those are less than 100 units. If you are a developer, you can see you're unlikely to make any money from your Android app.

While Google has been working on improvements to the Android Market, and selling lots of Android devices, you can't count on that to lift your app revenue to the point of profitability. So why do an Android app at all? Perhaps you can cross-sell a number of other apps, or hope to monetize your app through advertising (but that means getting lots of downloads). Maybe you have other products your app can help you sell... or maybe you just want to try out some design ideas when there's no restrictions on what sort of app you can offer.

I can't emphasize enough the importance of proper business planning before you spend any time developing an app, either for Android or iOS. Really, while the situation is certainly better for an iOS app, it's not all that dissimilar. Most iOS apps sell less than 1,000 units, too. That's not a great return unless you only spent an hour or two putting your app together, which seems unlikely.

A successful app is going to be a lucky break, and it's going to have to be very well executed, too. Regular updated content and solid marketing are going to help, but there's no magic potion that will make your app a hit.

Android Leads In Share, iOS In Revenue

See a larger version here.

Here's a recent survey of global smartphone market share that may influence how you allocate your development dollars. Android has 53% of the market, iOS has 28%, RIM has 16% and everyone else is a trace element.

The key question is really how much money can you make on a platform, and this is where iOS wins with 50% f all the revenues. Android has 39%, and RIM shrinks to only 9%.  This is no doubt due to in-app purchasing being baked in on iOS, and the severe hardware/Android version fragmentation. Yes, Android is more open than iOS, but that leads to a much wider array of hardware and Android versions, which makes developing and testing software significantly more difficult.

Of course, the picture is going to change over time. In the near term, we can expect Android and iOS to continue growing at the expense of RIM. Nokia's collaboration with Windows Phone 7 won't really move the needle, if it does at ll, until next year sometime. I expect Android revenue numbers to improve as the effect of integrating in-app purchasing takes hold, and the effects of their store improvements occur. Until Apple makes a serious run at the lower-cost smartphone market (which might happen this year or next), I think Android will continue to outgrow them.

Breaking: Android News From Google I/O

It's in yur base, killing yur market sharez.

Google's I/O developer conference is underway, and some of the news is of great interest to game developers:

• Android activations have hit 100 million devices now, and new activations are happening at the rate of 400,000 per day. There are now over 200,000 apps in the Android Market, and they've had 4.5 billion installations.
• Google TV is getting Android 3.1, the Android Market, with Sony, Vizio, Samsung and Logitech all on board with selling hardware. Hopefully we'll hear more specifics in the next day or two.
• The Android version coming in Q4 of this year is called Ice Cream Sandwich, and it will work on phones, tablets, and Google TV too I bet, intelligently detecting the nature of the device and configuring the interface accordingly.
• Android goes multimedia: The Android Market is launching movie rentals and a music streaming service for Android devices or web browsers is coming up, where you can upload your own songs (up to 20,000 of them) and have them available anywhere. Who needs local storage?
• Google invades the rest of your home, announcing a link to home automation. These guys are everywhere.

In-app purchasing is also due to kick off soon, which will certainly help game developers. Also in the works is a plan to get all the phone manufacturers on board with upgrading Android on their devices in a more consistent way. Hopefully this will happen, because device and OS fragmentation is a huge problem for Android developers. While the Android market in aggregate is huge, it's really a collection of much smaller markets with significant differences between devices and Android versions... differences that may require you to test your game out on dozens of devices.

There will be more news coming, and I'll keep an eye on it.

Smartphone Market Share: Android Up, iPhone steady, Blackberry Who?

Market share... isn't that something RIM used to have?

It's interesting to watch to the market share numbers for smartphones over time. There are no big surprises in the numbers themselves: Android continues to rise (up to 34.7% from 28.7%) , Apple gains slightly (up to 25.5% from 25%), Blackberry continues its headlong plunge (dropping 4.5% to 27.1%; they've gone from over 40% a year ago to about 27%), Microsoft continues to go from bad to worse while awaiting Nokia's introduction of Windows Phone 7 phones.

The real surprise, to me, is what has to happen before RIM takes action to prevent (or, at least, delay) its complete loss of market share and relevance. Are they striving to be the beeper company of the 21st century?  Apple should pass them this quarter in terms of market share, and from there RIM is just racing downward to see how long it takes to reach Microsoft's market share of under 10%.

At least Nokia figured out that it was in trouble, though they had to completely change out their management team in order to come to that realization. Now they are trying to do something about it by adopting Windows Phone 7, though how successful that effort is we won't know for a couple of years. RIM, though, just continues making Blackberry phones with minor improvements as if nothing has happened in the phone market. Kind of sad, really. It must be ego; the co-CEOs of RIM just don't want to admit how badly they've screwed up, and so they will continue to deny there's even a problem until they're escorted off the campus by security. Let's hope, for RIM's sake, that occurs sooner rather than later.

Meanwhile, if you're a developer looking to make some money on games, better try iOS or Android. I guess there is an opportunity for a small developer on Blackberry or Windows Phone 7, since you could stand out in a field that's much smaller than Android or iOS, and thus get some attention and brand equity before taking your title to the platforms where you can really sell a lot of copies. For larger developers, though, there's nothing to gain by looking at the Blackberry marketplace. Except, perhaps, a delightful frisson of schadenfreude.

AppDroid Apocalypse, Nowish

The face of destruction.

With Google's I/O conference coming up next week, it's a good time to look at what's happening to Google TV and Apple TV. According to this report, Google TV 2.0 will be coming with support for other chips than Intel, Android 3.0, and a full Android Market unleashed. What's that all mean? A lower price tag, since ARM-based chips are much cheaper than Intel's, an easier interface, and better graphics.

Which all means that Google TV may have a chance... if Google has been smart enough to cut some deals allowing content from major broadcasters to be shown through Google TV, unlike the first version. Sorry, Google, but if people can't watch the TV they want to watch through Google TV, don't expect the unit to take off.

Meanwhile, all is quiet on the Apple front... too quiet. Rumors have been bubbling up about the massive data center Apple has constructed in North Carolina, which apparently will be used in some fashion for iTunes. But it's probably connected to Apple's recent purchase of iCloud, and the streaming music service, and the deals Apple's been cutting with major music labels. I suspect even more than that... other rumors have Apple eying Netflix's business.

It all makes sense to me. Apple could certainly turn Apple TV into another huge growth center if they can put the pieces all together. Imagine streaming video deals where you could use the Netflix model, which has proven so popular Netflix now has more subscribers than Comcast. If you focus on streaming content, which you can do if you have a massive data center, then you don't need large local storage... a few GB in an Apple TV unit would suffice, thus keeping the costs of the unit way down. Streaming video, streaming audio, purchases kept in the cloud instead of stored locally... Now you put an A5 chip in the Apple TV, and suddenly the graphics power is now better than a Wii, and closing in on Xbox 360.

Flip the switch and allow the full App Store to be there on Apple TV. Now you're seeing a $99 box that outdoes a Wii for gaming power, easy use of an iPhone or an iPad as a controller (easily outdoing the planned Wii 2 controller-with-a-screen we're hearing about), and thousands... no, hundreds of thousands of apps available. Most of them for free or a few dollars... tens of thousands of games, and thousands of other types of apps, and more created every day.

Yeah, this is all coming soon to your family room, once Apple gets all the pieces in place. The media deals are the hardest part. The data center is ready, the hardware is ready. The gaming industry? Not ready. Nintendo, Microsoft, Sony... this is the next enemy you have to fight. Apple has hurt your handheld business, Nintendo, now they are aiming right for your jugular in the family room. Sure, Nintendo has their new console planned... but it will be hundreds of dollars, not $99. And I see no sign that Nintendo is going to embrace the new app business model that has propelled the smartphone business to amazing growth in the last few years.

Just to make it all worse, Apple is on a one-year hardware cycle, where the hardware gets a significant power boost every year. Think the new Apple TV that will be coming, with an A5 chip, is too wimpy? Wait a year for a newer $99 box. Another year or two after that and it will be more powerful than Nintendo's new console.

I still think Nintendo, Microsoft and Sony have some amazing assets in this fight, and a chance to continue to hold significant market share in the future. But unless they start embracing the future sooner rather than later, they are going to see their market share diminish between the onslaught of Google and Apple. The handheld business is just about a lost cause now, though Sony seems to be fighting an intelligent rearguard action with the NGP. Next up is the console business... and I can see that being upended the same way the phone business was upended in a few short years, by Apple.

Developers, get ready to rumble...

More Free Android Apps Than iOS

Handy reference for the number of applications on different platforms; original here.

According to Distimo, there are now more free apps for Android (over 134,000 of them) than for iOS (over 121,000). Of course, iOS has many more paid applications than Android (about 3 times as many, in fact). This does go to demonstrate the fact that Android app developers primarily make money from advertising or virtual products (even before official in-app purchasing appears on Android) rather than from app sales.

This makes it harder for developers who'd like to charge for their Android app: Customers are expecting to get their Android apps for free since so many already are free. It's a vicious feedback cycle. Developers can spend their time complaining about the situation, or just realize it is what it is and figure out how to profit from reality.

I recommend the second course of action.

Interestingly, the same report shows that iPad applications are increasing in price over time.

See the larger version here.

The average price paid for an iPad app is over $5... quite a contrast to the iOS apps which struggle to crack $2. Encouraging news for game developers looking to make some money on the iPad, though. Meanwhile, the number of apps featuring in-app purchases has declined. Perhaps because there are more books being put into the iPad?

The Power of iPad

Some fascinating facts and figures about the iPad.

The iPad 2 has gotten good reviews, and it's easy to see why: Thinner, lighter, faster, with cameras, and at the same price as the old one. What's not to like? Still, we saw a flood of Android tablets being shown at CES... why haven't we seen them yet? Wait, the Xoom is finally hitting the stores... but it seems to be more expensive than the equivalent iPad. What's up with that?

Apple is being clever, that's why. Apple's sneaky strategy is using its $60 billion in cash to buy up displays, forcing other tablet makers to delay release or pay a lot more, thus raising the competition's prices. Apple has reportedly bought up over 60% of all factory capacity for touchscreen displays... and laid out wads of cash (over $4 billion) to do so.

Talk about a win-win... Apple secures production capacity for their projected needs for years ahead, and at the same time forcing competitors to either build new factories, pay significantly higher prices, or accept inferior quality. No wonder the competition doesn't look so good yet.

I expect that Apple will maintain their market share pretty well; they're likely to be constrained more by how many they can build, than by the competition. Android tablets will be here by summer in droves, more than likely (and HP's WebOS tablet, too), just in time for a rumored iPad 3 launch in September or October so Apple can regain the high ground... it's going to be an interesting year.

Android Market Gets Real Search

If this thing really works, it could be huge... I'm gonna have to check it out. Chomp promises to be the search tool that Android really needs, that will classify Android apps by really figuring out what it's for rather than just what tags the developer hung on it. (I really hate the fact that all these social games call themselves "RPGs" and make it impossible to find a real RPG on Android or iOS.) We'll see if it amounts to anything... but it sounds like a good idea.

Android Growing

The Android Market clearly skews to free apps.

It's not news that the Android market is growing faster than the iOS market; after all, Android is the #1 smartphone these days, in terms of market share. What's interesting, according to this recently released study, is that the Apple App Store attracted nearly 24,000 developers between August of 2010 and February of 2011. During the same period the Android Market attracted about 4,000 developers. The numbers of developers grew by about the same percentage in both markets; 48% in the Apple market versus 40% in the Android market.

Interestingly, Android developers created an average of 6.6 apps, whereas iOS developers had an average of 4.8 apps. Perhaps this makes up a bit for the smaller number of developers...

Clearly developers prefer the Apple environment, at least so far. Perhaps it's because paid apps are more popular, and developers have found ads aren't yet as lucrative a way to monetize your app. The entire article is worth a look, as it contains more useful information about advertising on both platforms.

Angry Birds, Happy Company

That's some tasty game sales.

I know a number of industry veterans have looked down on the smartphone game market. They say things like this: "Sure, there's lots of smartphones out there. But games are mostly free or only a few dollars! Maybe we'll sell a lot fewer copies of a title for the DS, but at least we can charge $30 for it. We'll never see that kind of money from a smartphone game!"

Well, unless you're Nintendo, the best you can hope for on a DS game is about 5 million units (Dragon Quest IX). Which, assuming a retail price of $30 and the publisher makes 30% of retail, means about $45 million in revenue. A DS game would cost somewhere in the realm of $250,000 to create (although some cost less; new games for the 3DS and the Sony NGP are going to be more in the $1 million cost range or more). So that's a pretty good return, right? Let's see a smartphone game do better than that!

OK, here's the info on Angry Birds. The game cost Rovio about $140,000 to create, and to date has brought in $70 million. Yeah, you read that right. Rovio is making $975,000 a month just from the free-to-play Android version of the game, and about that much from the cuddly toys. OK, they do say that 40% of the Angry Birds revenue comes from non-game sources like licensing and merchandising. But that still means that the game revenue is about equal to the best-selling thirdparty DS game ever, and Angry Birds is nowhere near finsihed generating revenue, thank you very much.

What about the best-selling Nintendo handheld game? New Super Mario Bros. has sold 26 million copies, so it's roughly in the $250 million dollar revenue range. Angry Birds isn't there yet, but give it a couple of years.

This should make executives wake up and smell the opportunity, or the danger. Revenues from smartphone games will likely exceed revenues from handheld games this year, and the gap will just widen in the future. Sure, there are thousands of smartphone games that never sell very many copies and never make money. But large game publishers should know how to make games that sell, and how to sell them... at least, you'd like to think so. And Rovio was not a large company when they created Angry Birds, even though now they are up to 40 employees.

This is a huge opportunity for smaller developers, if they can figure out how to make a great game and let the world know about it. Don't let anybody tell you smartphone games will never amount to anything. Maybe that's true of most of them, but certainly not all.