Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) continue to reign supreme when it comes to mobile app purchases, according to a Canalys report issued on Monday, while Microsoft (NASDAQ:MSFT) and BlackBerry (NASDAQ:BBRY) are more paupers than princes in this court. Google Play and Apple’s App Store are dominating app and in-app purchases, but Microsoft’s Windows Phone Store and BlackBerry World are struggling to get their footing, despite a growing smartphone market and a double-digit increase in app downloads in the last three months.
The report shows that app downloads at the four stores totaled 13.4 billion in the first quarter, up 11 percent from the October to December quarter, with revenues reaching $2.2 billion from app sales and in-app purchases (before revenue sharing), up 9 percent from the previous quarter. In North America, downloads and revenues were up 8 percent and 6 percent respectively. Emerging markets such as South Africa, Brazil, and Indonesia, showed the strongest growth in terms of app downloads, but revenue growth was less strong. Conversely, revenue growth was stronger in Western Europe than was growth in downloads, up 10 percent versus 8 percent.
“Apps have had a huge impact on the way consumers use mobile devices, what they value, and what they expect from smart phones and tablets. They are now central to how consumers engage with content and connected services, and how they personalize their devices around the app-enabled features that are important to them,” said Adam Daum, Canalys Chief Analyst, Analytics.
“This is a multi-billion-dollar growth market, with more and more consumers around the world now comfortable and confident in finding apps, downloading them and making in-app purchases, on a growing addressable base of smart phones and tablets.”
This is all good news for the app market in general, which continues to grow at a rapid clip as smartphones increase their levels of saturation in various markets around the globe. However, positive results were more heavily skewed toward Google and Apple, which have the world’s two most dominant smartphone operating systems: Android and iOS. Apple’s App Store accounted for the lion’s share of revenue, roughly 74 percent of the total, while Google saw the greatest number of downloads — 51 percent.
“Apple’s App Store and Google Play remain the heavyweights in the app store world,” said Canalys’s Tim Shepherd. “In comparison, BlackBerry World and the Windows Phone Store remain distant challengers today, though they still should not be ignored.”
BlackBerry once seemed to be on its way out — its market share has dissipated over the years since Apple’s first iPhone release — but is now in a similar position to Microsoft, an underdog trying to claw its way closer to the top. Both are in a distant third and fourth to giants Apple and Google, but as the industry proves there’s still room to grow, each hopes to find a niche and build a loyal customer base. BlackBerry’s new line of smartphones out this year are expected to help in that endeavor, and while no one thinks they have a real chance of ousting the iPhone from the number-one spot, greater phone sales will not only be immediately accretive to earnings, but could increase app sales in years to come.
“BlackBerry and Microsoft particularly need to continue to proactively work to attract fresh, innovative content and services to their respective catalogs, and fill gaps in their inventories,” adds Shepherd. “But they also need to increase device sales around BlackBerry 10 and Windows Phone 8 to increase the addressable market opportunities on offer to developers.”
The whole system is cyclical: a company must first have an attractive platform on which developers can build their apps, but that company must also have a strong enough user base to make it worth the while of developers to create apps for its platform. However, growing a strong user base is hard without a strong app library to lure in users. On the flip-side of that coin, though, is evidence that stronger phone sales increase app sales and attract more developers, who in turn improve the library, increasing both app and, ultimately, phone sales.
Here’s how Apple’s stock moved on Monday:
Copyright Wall St. Cheat Street. All rights reserved.