Google Due to Provide In-app Purchases This Month: Will It Make a Difference to Developers' Bottom Line?

Smartphones based on Google’s Android platform enjoyed tremendous popularity and sales in 2010. It appears Android phone sales overtook Apple’s iPhone in that period. However, while Android phone sales were generating healthy revenue, the same cannot be said for Android apps. Here’s what I summarized in this blog item less than two weeks ago.

Android Market 2010 Revenue Only 6% of Apple App Store Revenue

1. Android Market app sales generated a mere 6% of the revenues genearted by Apple’s App Store in 2010.
2. In March 2010, one estimate was that Android users spent just 10% of what iPhone users spent on apps.
3. In September 2009, I noted than a popular paid Android app generated less than $100 per day while a popular iPhone app had generated more than $10,000 per day in late 2008.

Apple’s introduction of in-app purchases when iOS 4.0 was released in the summer of 2010 provided a healthy revenue stream for both free and paid apps. In fact, some paid apps converted to free apps with in-app purchase options and generated a better revenue stream than ever before.

TechCrunch reported on what turned out to be web-app in-app purchases instead of Android apps in this item.

Google’s New In-App Payments Product Set For Launch In May 2011

TechCrunch notes that Android in-app purchases is still on target for availability this month (the end of Q1 2011). The question is: Will this feature help Android developers the way Apple’s in-app purchases helped iOS developers?

My guess is that Android developers will realize a small increase in revenue from in-app purchases but not anywhere near the kind of revenue iOS app developers see. Based on past research, it is clear that buying apps is not something Android users tend to do.