Why developers focus on ‘loser’ iOS over ‘winner’ Android

Linux has beat closed-source operating systems in every hardware category, but in mobile its Android derivative just can’t win in the ecosystem competition

Why developers focus on ‘loser’ iOS over ‘winner’ Android
Rob Schultz/IDG

Back in the 1990s Linux creator Linus Torvalds used to joke that his ultimate aim was “total world domination.” In many respects, Linux has achieved this goal, with dominant or absolutely crushing market share in everything from high-performance computing to enterprise servers to cloud servers to mobile devices.

In this last category, however, the Linux bandwagon has largely come off the rails. Sure, Linux (as the underpinning of Android) now claims 86 percent global market share in the all-important smartphone market. Unfortunately, that outsized market penetration has completely failed to translate into the kind of ecosystem benefits that Apple enjoys with its iOS. And that means mobile app developers focus on iOS, not Android.

Android “won,” but at what cost?

Worried that Apple would own the growing smartphone market, Google bought Andy Rubin’s Android, Inc. in 2005 and shipped Android in 2007, with the first Android-based device hitting the market in 2008. Roughly a decade later, Android is everywhere; recent Gartner data shows that 85.9 percent of smartphones sold globally in 2017 ran Android, versus 14.0 percent running iOS.

In fact, Android keeps gaining market share, climbing 1.1 percent over the past year. All told, Android’s active installed base tops 2 billion users now. This is good news for Google, which gets to have its eponymous search engine on most Android devices (China, a large Android market, blocks Google services). But it’s not nearly as good as it should be for Google or, really, for anyone, including consumers.

In other markets, like enterprise servers, the rising tide of Linux has lifted virtually all boats. Server manufacturers make money, as do software companies. Although Red Hat, the enterprise standard for Linux, makes billions, the ecosystem around Red Hat Enterprise Linux and its competitors makes hundreds of billions.

That’s not the case in smartphone land.

Yes, companies like Samsung sell a lot of Android-based devices and, yes, companies like Spotify sell music subscriptions to Android users, but the ecosystem around Android is nowhere near as profitable—or big—as Apple’s iOS ecosystem, even though Android devices outsell iPhones 6:1. By some estimates, even Google makes more money (through Google services particularly search) from iOS than from Android. Four times as much.

Closed ecosystem, open cash register

Nor is Google alone in this. According to App Annie data, the average mobile app makes four times as much on iOS than Android. In fact, despite having half as many downloads as the Google Play Store, Apple’s App Store generates twice as much revenue for developers. There may be a variety of reasons for this—Android tends to dominate in lower-income markets—but the outcome remains the same: Apple’s ecosystem generates a lot more developer revenue than Google’s Android ecosystem.

What’s true for third-party developers is also true for the primary mobile combatants: Court documents in 2016 revealed that Apple made more on mobile in one quarter than Google had made in the entire history of Android.

Of course, that’s counting all of Apple’s hardware sales, while Google primarily monetizes through search. But if you compare hardware apples to apples, Apple still outperforms Android. Apple’s average selling price (ASP) is $800, compared to the industry average of $300, as Asymco analyst Horace Dediu breaks it down. And Apple’s number is $100 higher this year than last, thanks to the introduction of the high-end iPhone X. As Dediu notes, “This is not only unprecedented for Apple but for the entire Industry,” as Apple defies gravity to widen the gap on ASP and, in turn, profitability from its phone business.

Meanwhile, Apple’s services business (like Apple Pay) has exploded, a total of 240 million paid subscriptions, growing by 30 million in the last quarter alone. With an active installed base of 1.3 billion, Apple is printing money as those cash-rich customers spend on apps, music, retail (Apple Pay), and more. Over in Android land, Google just rebranded Android Pay (itself a 2011 rebranding of Google Wallet) as Google Pay in an attempt to give its own payment system a new lease on life. It may not work.

Who to blame for Android’s low-profit “win”?

Android has more users, but they spend less money, attracting fewer developers. App developers default to iOS as their first platform, Android second. Consumers demonstrate 92 percent loyalty to the iPhone, according to Morgan Stanley data. Android? Just 77 percent at the high end (Samsung), and closer to 50 percent for LG and others.

In sum, Google’s Android meets Torvalds’ “total world domination” by market share measures, but that market share isn’t translating into the kind of developer devotion that Linux (and other popular open source projects) commands in other markets. It may well be that the fault is Google’s for too tightly controlling Android, but Apple’s tight control of iOS seems to be having the opposite effect.

Indeed, in the rapidly evolving smartphone market, a tightly controlled, premium experience seems to be the winning strategy, one that the not-quite-open-nor-closed-enough Android can quite pull off.

Copyright © 2018 IDG Communications, Inc.

How to choose a low-code development platform