44 Billion Apps

Apps... by the billions.

That's how many we will have downloaded by 2016... 44 billion of the little devils. And a good percentage of them, probably the biggest percentage of them, will be games. That's 6 apps or so for every man, woman and child on Earth by 2016. Somebody's gonna be making money.

Yeah, the companies taking 30% of the revenue from each app sold...

100 Million Free iPhone Games... In March Alone

In-app purchasing is becoming very popular, very fast.

That's the amazing number from a study by Xyologic, which has been combing through App Store data. A full 40% of those titles have in-app purchases. Over 80% of all apps downloaded in March were free apps. Obviously, free-to-play is the wave of the future, right?

Maybe... or maybe not. The dark underside of this wave of free apps is the pay-per-install method of marketing your app. Seems there are lots of places where you can pay a fee per installation to get your app installed in thousands of phones... in order to drive up your numbers so you can appear on Apple's best-seller lists. This can run upwards of $30,000 or so, but the payoff can be considerable; being in the top seller list is about the only way to get noticed in the App Store since Apple's tools are so feeble.

Now Apple is cracking down on apps that offer this cross-marketing opportunity. Which is also shooting down more legitimate cross-marketing efforts. It's really a mess right now, and hopefully Apple will take charge and solve the fundamental problem: App discovery. It should be a warning sign when developers are gaming your system to be able to sell games on your system, if you know what I mean.

Apple may be facing some real retail competition when Amazon really gets rolling selling Android apps (and their own Android tablet... and maybe an Android iPod competitor? Or an Android phone?). Which is exactly why Apple should really be working hard to improve their shopping tools right now.

Amazon App Store

It seems likely that Amazon will take a leading role in selling Android Apps with their upcoming App Store. One of the nice features: You'll be able to buy your apps online even before your have your Android device, in fact. So when you get your device you can have a full slate of apps ready to go.

The real news here, though, is that unlike Apple and Google, Amazon knows a thing or two about online stores and how to optimize sales through them. And how to help customers find products in a virtual environment. As in, "Customers who bought this also bought..." applied to Apps will be a huge way to get potential buyers to find your app. Think about all the customer reviews and how you can sort them, the customer lists, the wish lists... the tools and capabilities are endless compared to the crudity that is the current Android Market or the iTunes store (which is better than the Android Market, but that's not a high bar).

I look forward to Amazon's store debut, whenever that might be. Let's hope it's soon.

This is one of the nice features about Android that hasn't really been taken advantage of yet -- that anyone is allowed to open an app store. I'd like to see a game-specific app store, one where you could find games in the proper categories... rather than publishers sticking every tag possible on a game so they show up in all categories (see the iTunes store for examples too numerous to count).

2011: The Year Android Takes Over

If you have been watching over the past year, you've seen Android making enormous strides. Here's the numbers to really drive that home: Android has just displaced Nokia as the top smartphone seller, as of the December quarter. Android sold 32.9 million handsets in three months versus Nokia's 31 million. Not bad when you consider that the year before Android had about 4 million handsets sold in that time. Zoom. The trend for 2011 is looking even healthier; you can expect somewhere north of 150 million Android phones to be sold this year.

Which is a great market... if the market is a good one. Which it hasn't been, to this point. The Android Market has lacked many of the basic tools for finding and promoting apps, even the relatively crappy ones the iTunes store offers. Well, Google's finally had a press conference, and guess what: The Android Market finally gets a web store. This is going to really help move Android Apps, because up until now there has not been one official place where you could see information about all apps. Individual developers would have to rely on their web pages, which is just not as good as getting traffic through the place you know every Android user will venture.

Not only that, Android will finally get in-app purchasing, the feature that's now accounting for half the revenue in the iPhone market. Hopefully this and other features should start to narrow the gap between iOS and Android app revenue for developers. Heck, even Google has not been happy with the Android Market's purchase rates.

The news just gets better for Android, as Google showed off their new Android 3.0 Honeycomb release, which has (finally) been designed to work and play well with a tablet form factor. Here's the short review: Android 3.0 for tablets rocks. The consensus seems to be it's the first serious iPad competition, at least when looking at a Motorola Xoom tablet running Honeycomb. After a whole bunch of lame tablet efforts, we will finally see an Android tablet worthy to compete with the iPad.

Which just means that the iPad 2 announcement must be coming up soon. Nothing seems to delight Apple more than to have their competitor show their hand, then lay down theirs and take the pot. I expect Apple will announce the iPad 2 in the next month or two, and it will put them firmly in the leadership position. Which just means that Android tablets will have to be reasonably priced to compete, which is good for everybody (since it will help hold Apple's prices down, too).

That's not even the end of the Android news: If anyone had any doubts that Google TV would eventually sell games, the fact that there's a Google seminar about games on Smart TVs at the upcoming GDC should dispel any doubts. I'm sure the current lame implementations of Google TV will seriously improve this year, and hopefully Apple has been working on making Apple TV better, too. This is the year console games need to step up their efforts, because some serious competition is coming.

Related to that, more Flash developers are looking to develop Android games, according to this report. Notably, only 5% of the Flash developers they surveyed make more than $500 a month from their games. No wonder 52% of them plan to make Android games this year.

Overall, it looks like a good year for Android. Not so good for Nokia and RIM, who continue to wander aimlessly in search of strategy that works. (Note to RIM: Producing a tablet, even a pretty cool one like the Playbook, that requires a Blackberry with it in order to access email, means you'll never sell one to someone who isn't already a Blackberry owner. Aren't you interested in expanding your market?) And poor Microsoft, whose Windows Phone 7 is out there with no one paying attention... and HP, whose WebOS is about to be re-introduced... will they find a place in the market?

2011 is going to be a very interesting year.

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.