In its second-largest acquisition, Amazon buys the company for $970 million.
The No. 1 retailer in mobile commerce lifts the curtain on its App Store, revealing that more than half of its total app sales since the 2008 launch of the App Store occurred last year. Apple owns 63% of the mobile app market compared with Android’s 37%, an app analytics firm finds.
In 2013, Apple Inc.’s App Store generated $10 billion in sales of apps and in-app purchases of digital content such as game tokens and issues of magazines, the technology giant reports. Apple also reports paying app developers $15 billion between the App Store’s launch in 2008 and the end of 2013, $8 billion in 2013 alone. Apple takes a 30% cut of all app and digital in-app sales; thus, with $15 billion representing 70% of total App Store sales, total sales since launch have hit $21.43 billion. Apple does not take a cut of sales of physical merchandise through retailers’ Apple apps.
Apple, which boasts 1 million apps in its App Store, declines to reveal an important figure. The $10 billion figure is not purely mobile; it includes sales of apps on Mac desktop and laptop computers. The percentage of sales stemming from Apple’s suite of mobile devices—the iPhone, iPod Touch, iPad and iPad mini—is unclear. However, 500,000 apps in the App Store are designed specifically for the iPad and iPad Mini, and most of the other 500,000 apps are designed specifically for the iPhone and iPod Touch, so the percentage of sales stemming from mobile devices is likely extremely high.
“The non-mobile portion of Apple’s App Store sales is no more than low single digits as a percent of total,” says analyst Horace Dediu, founder of Asymco, a mobile technology research and consulting firm, who follows Apple.
With 53.3% of total 2008-2013 App Store sales occurring last year, Apple, No. 1 in the Internet Retailer Mobile 500, clearly saw its mobile fortunes continue to soar in 2013. App Store sales certainly got a boost from massive sales of iOS devices: Just between June and October of 2013, Apple sold 100 million iOS devices, the company reports.
“More iOS apps and more iOS devices drove developer revenue through the roof last year,” says Ash Kumar, CEO of TapSense, a mobile marketing firm that works extensively with apps. “In 2013, the number of apps in the App Store store grew 40% and the popularity of games like Candy Crush and Mine Craft, which have in-app purchases, had a significant impact on developer revenues. There are rumors that Candy Crush can earn up to $1 million in a single day.”
So how do Apple’s App Store sales compare with those of the company’s mobile nemesis, Google? Users of mobile devices running Google’s Android mobile operating system get their apps from Google Play, the official Android app store. Google did not respond to a request for 2013 sales figures. However, Distimo, a mobile apps analytics firm that tracks millions of apps and billions of app downloads, says in November 2013 the Apple App store owned 63% of the mobile app market while Google Play accounted for 37%. Distimo does not disclose sales figures. But if Apple’s reported $10 billion represented 63% of 2013 total app sales, Google Play’s 37% would amount to $5.87 billion.
When it comes to mobile device market share, 82% of smartphones in use worldwide run Android, according to research firm Gartner, while 81% of North American Internet traffic from tablets stems from iPads, according to ad network Chitika. So even with an enormous lead in smartphone users and there being a great many more smartphone users than tablet users, Android still comes in a distant second to Apple in app store sales.
“While both Android and iOS users love apps, there is a significant difference between the users on each platform,” Kumar says. “On our app platform we see 80% of mobile commerce transactions happening on iOS. This is not a huge surprise when you realize that the income of an iOS user is 30% to 50% higher than an Android user.”
Apple reported in June 2013 that there were 72 million Mac users worldwide, and in October 2013 said the company had sold 700 million devices running its iOS mobile operating system since the launch of the iPhone in 2007. It did not give the number of active iOS users.