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Apple's iTunes App Store Beats Android Market on Pricing

Apple
February 23, 2012 4:51PM

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The iTunes App Store is a mature but still very closely controlled retail environment while Google's Android Market remains more open but also less secure and consumer friendly. Given the differences between iTunes App Store and Android Market, "developers and publishers use the stores in different ways," said analyst Tim Shepherd.

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A new study released by Canalys Thursday demonstrates that the world's most popular iPhone apps are being priced significantly lower in Apple's iTunes App Store than the top paid Android apps in Android Market.

In the United States, for example, the average price of Android Market's top 100 is $3.74 per Android app, vs. $1.47 per iPhone app in the iTunes App Store.

Though it is a plus for developers to apparently be able to charge more for their apps on Android, the reality is that fewer people are willing to purchase apps on Android than on iOS today, said Rachel Lashford, managing director for mobile and Asia-Pacific at Canalys.

"Developers and publishers need to balance the iOS volume opportunity with a potentially greater value per download opportunity on Android -- where more apps command higher price points," Lashford said.

Though selling more apps at higher prices is the Holy Grail for developers, achieving big volumes on Android is no small challenge, Lashford said.

"More aggressive price competition around Android apps would help to encourage more consumers to make their first app purchases, drive greater download volumes, and ultimately be good for the vibrancy of the app ecosystem," Lashford said.

A Much Bigger Audience to Monetize

There are several key factors that are likely influencing the mobile app price discrepancy between Android Market and the iTunes App Store, said Al Hilwa, director of applications software development at IDC. For example, the early market leads that Apple gained when it launched its iconic iPhone and iPad should not be overlooked.

Developers price their apps "based on the volumes they anticipate to sell," Hilwa said. "The bigger the demonstrable audience to monetize over, the lower and more competitively you can set a price."

What's more, Apple has not only captured "the upper end of the user-base" but also has the ability to provide developers with access to a much less fragmented smartphone or tablet audience. "[This] creates a much bigger effective audience to monetize over," Hilwa said.

Yet another important effect is the level of promotion pricing. "In retail the price set is not always the price paid and so a promotionally oriented will show much higher average prices," Hilwa explained. "I think this is a big contributor to the effect."

Price Competitiveness Is Crucial

The iTunes App Store is a mature but still very closely controlled retail environment while Google's Android Market remains more open but also less secure and consumer friendly. Given the differences, "developers and publishers use the stores in different ways," said Canalys Senior Analyst Tim Shepherd. (continued...)

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