Although Android now has more market share than Apple and pushes out more app downloads, Google still pales in comparison to Apple in terms of revenue being paid out to developers. But the founder of Wattpad has some ideas on how to make a decent business on Android.

Android developers struggle to make a buck despite platform’s success

Making money by selling apps in the Android Market is still unlikely despite the massive number of users downloading apps there, according to Toronto-based developers.

Businesses looking to cash in on Android apps are better off placing ads in their apps or offering in-app purchases, says Allen Lau, the CEO and co-founder of Wattpad. It’s the best approach in an app store loaded with free apps, hindered by spammy rogue entrants, and obfuscated by a tedious checkout process.

“That adds a lot of noise in the Android Market and it makes it hard for paid applications to bubble up and catch the attention of the users,” he told the crowd at AndroidTO, a Toronto event organized by Android developer enthusiasts Yorkville Media Centre. “The payment method is sub-optimal and that makes it very difficult.”
 
Google Inc.’s mobile operating system recently passed another landmark in mobile market share with 44 per cent of all app downloads, according to ABI Research. Apple Inc.’s iOS dropped to second spot with a 31 per cent stake in the download share, down from a peak of 50 per cent in December.

Open-source Android, which is sold on the devices of many manufacturers, long ago surpassed Apple for market share of smartphone sales. Last quarter, 56 per cent of smartphone buyers bought an Android while 28 per cent bought an iPhone.

While Android may serve one billion app downloads per month, 66 per cent of those are free apps compared to on iOS, where 66 per cent are paid-for apps. Android’s payout to developers is only two per cent of Apple’s payout to iOS developers, Lau says.

It’s hard to name another platform with as much momentum as Android right now, says Mark Reale, AndroidTO organizer and director at BNotions. The platform is even being looked at by NASA as potential software to run moon rovers, and developers embrace the open source model.

“They don’t have to worry about jumping through hoops and getting approvals,” he says.

Openness is great for developers because it allows them to launch to market quickly, Lau agrees. But there is also the downside of copyright-infringing content making its way to Android Market. There are also so many free apps that it is hard to grab user attention with a paid app. As a result, a successful app must attract millions of users.

“It’s really a volume game, I can’t emphasize this more,” he says. “When you have no user, you have no way to make money.”

One bright spot for making money on Android is the option of cost per metric (CPM) advertisements running in an app, Lau says. These can often be a few times higher on Android compared to iOS. Developers can expect a range from in the pennies up to $0.30.

Don’t be afraid to swap out one advertising network for another if you find an ad’s not working, he advises. Also, video and other more intrusive ads can generate higher CPM. “It’s great for developers, but make sure you don’t sacrifice your user experience.”

Developers can skip developing for Android tablets right now, says Ash Kheradmand, CEO and co-founder of Andspot Inc. But start thinking about Android 4.0 instead.

“The emulator is very bad. It’s very slow. I’d say stay away from it,” he says. “Ice Cream Sandwich is something else for people to be very excited about. It will likely take about five months to get 40 per cent market penetration.”

The most up-to-date Android version currently available for smartphones is 2.3 (or Gingerbread) and tablets are running version 3.1 (Honeycomb).

Amazon’s Android-powered Kindle Fire tablet could help Google’s fortunes in the tablet market, Reale says. “With the big mama waiting in the wings, the word on the street is there’s four million of those just waiting to be shipped based on pre-orders.”

Developers looking to cash in on their app should check and see if carriers in different regions offer baked-in billing, Lau says. Third-party payment providers such as Boku, Payfone, Urban Airship and Zong are also an option, but require revenue sharing.

Brian JacksonBrian Jackson is the Associate Editor at ITBusiness.ca. Follow him on Twitter, read his blog, and check out the IT Business Facebook Page.

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