The App Economy – Who Is Really Making Money

Posted by Howie Schwartz on June 23rd, 2011 at 11:26 am

It has been an interesting few months for APP Developers and marketers.  With Apple hitting 500,000 Apps and 10 billion downloads from its App store and Google racing towards 300,000 Apps and 3 billon downloads.  You would think that every developer with the word mobile in their resume is making a killing but as you will see below the big numbers and hype does not "make it rain" for all the players.

So who is really profiting from the App Economy?

1) Apple is making a killing.  Google still haven't figure out a consistent billing platform for paid Apps while Apple is profiting from the sale of every single paid App 24/7.  Apple is also in the money on every in-App purchase (Google is way beyond again when it comes to 'real cash' monetization). 

2) The mobile Ad networks and exchanges are profiting handsomely from App developers fighting for discovery in a crowed and hyper competitive landscape. 

3) The incentivized CPI (Cost Per Install) players were profiting wildly in the recent past.  Apple put the smack down on this incentivized model on their platform as it was manipulating their rankings.

4) The big developers and publishers keep getting bigger.  Gameloft, EA, to Angry Birds - the stronger get stronger as Apple (and Google) feature their new Apps and they are able to cross-promote their Apps across their own previous installs.

5) Small development / freelance shops are making small sums of money.  Especially Android developers are in demand and outsourced (many international) teams are picking up project work.

Who is NOT profiting from the App Economy (this may surprise you)

1) The average App developer isn't making money.  Discovery (getting your App in front of / noticed by consumers) is the number one problem developers face today.    It is worse than a needle in a haystack.  If you can't get your App found under 500,000 Apps you can't sell any paid Apps and if no one finds your free App you can't profit from in-App purchases or mobile advertising.

2) Google isn't really making money from their App Market.  At least if you compare them to Apple.  As I mentioned there is no consistent billing platform so paid Apps are a fraction of what Apple sees in volume and in-App purchasing is only starting to scale on Android.

3) RIM isn't benefiting as much as they should.  The App sensation should help everyone in the industry- but the Blackberry App World feels "stale".

4) Microsoft is just hanging out.   Not much to even say about Windows mobile yet.  I don't hear developers even bring them up today.  This may change as I never count Microsoft out in any market (no matter what others say).

5) The carriers long for the days of old.  The carriers loved the old days and their on deck walled gardens.  Then came Apple who slew them all.  The carriers have another downside - our Apps suck all their bandwidth and the double whammy is that they keep having to lower our data costs on to remain competitive.

As we approach 1 million Apps across the two leading markets the problem of discovery will just get more difficult and the gap between who is making tons money in the App economy and who is simply not profiting will widen.  But it will be a fun ride.

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