updated 12:45 am EDT, Fri September 23, 2011
Low monetization success rate on Android
Reinforcing the impression from developers and analysts that Android and iPhone users are very different in terms of how they utilize their smartphone devices, Asymco's Horace Dediu reports that his analysis of data from sources such as comScore, Boingo, GoGo and Millenial Media show that, when ad impressions and browsing are excluded, iPhone users tend to dominate data services (particularly paid services), while Android users, with a larger overall marketshare, do not.
The analysis not only implies that the two groups of users are fundamentally different, but that the two platforms are guided by different criteria, which may also predict how they are likely to evolve. As the charts (below) show, Android users have a remarkable aversion to paid in-flight Wi-Fi services (which here represents other sorts of paid internet-related services as well, such as app purchases or online buying) compared to iPhone users.
One of the keys to interpreting the data, Dediu says, is the statistic on ad impressions, which are almost exclusively found in free apps (not including browsing, which is broken out separately in the data). The data on ad impressions, gathered from Millenial Media and cross-referenced with mobile marketshare via StatCounter (June 2011),show that the two platforms are similar in scale: the iPhone, with medium marketshare, has a medium-to-low rate of ad impressions. Android, with a higher marketshare, has very high ad impressions -- suggesting that Android buyers are more willing to tolerate ads in order to avoid paying for apps or other services.
What the data suggests, says Dediu, is that ad consumption more-or-less scales with possession, but non-free services do not. Independent data on paid app sales and in-flight Wi-Fi use for Android back this notion, showing sales very far behind purchase rates on the iPhone despite Android's larger marketshare. Some of the difference can be accounted for by the fact that Android smartphones are sold at a variety of price points to different demographics, whereas the iPhone tends to target more affluent segments. There is also a variety of stores and payment methods in the Android world that may foster user confusion compared to the consolidated, curated model used by Apple.
Another factor has to do with the business models of the companies that produce the two OSes. Google is primarily and advertising company, and derives almost all of its Android-related income from advertising. Apple, on the other hand, gets very little income from advertising and primarily gains from sales of goods through the App Store. Neither model is inherently superior to the other, but it should be noted that Google has little motivation to improve app sales except as a means by which to spur further advertising, whereas Apple has strong incentive to keep the iTunes ecosystem attractive to developers, primarily through greater profits (an area where Apple still holds a commanding lead disproportionate to its marketshare).
Dediu compares Android to Blackberry and Symbian -- two mobile OSes that had high possession rates as recently as three years ago, but suffered from very low utilization in terms of post-sale monetization opportunities. A high rate of possession without economic participation, argues Dediu, implies a product that doesn't do its job well -- or one where the full features of the product aren't being absorbed. What Google will do to address the issue -- if indeed it even thinks the utilization ratio is an issue -- remains to be seen. [Charts via Asymco]