Significant increases in customer numbers in the emerging markets of Latin America and Asia are driving Google Play’s growth as it takes aim at closing the revenue gap with Apple’s App Store.
Google Play is already significantly ahead in terms of downloads, driven by countries like Brazil where cheaper Android handsets and devices are proving more popular than their less affordable iOS counterparts. Android phones average about $200-300 per handset, while the Apple iPhone starts at well over $500 in most markets for the most basic model.
On his tech blog, Benedict Evans highlights the overwhelming popularity of Android devices in emerging markets, compared to the U.S., where competition between the two operating systems is fierce.
Android dominance is particularly strong in Latin America, where the operating system accounts for more than 83 percent of smartphone sales. Those numbers are supported primarily by sales in the region’s three biggest economies — Argentina, Brazil and Mexico — but the smartphone market has also seen major growth in countries like Chile and Colombia. In the fourth quarter of 2013, smartphone sales in Latin America grew by an astonishing 96 percent — most of them devices running the Android operating system.
The number of downloads from Google Play worldwide exceeded Apple App Store downloads by 60 percent in the second quarter of 2014, according to a new report from App Annie. The report adds that the, “explosive growth was driven by emerging markets, with Brazil continuing its rise, and Thailand and India seeing significant increases in Google Play downloads in Q2 2014.”
Most Google Play downloads were made in the US during the three months, with Brazil in the second spot. Brazil in particular benefited from hosting the 2014 World Cup, doubling its market share of downloads in Google Play’s Sports category from Q1 to Q2.
While Google Play dominates in the number downloads, it still lags significantly behind the Apple Store when it comes to revenue. App Annie estimates that Apple’s App Store earned 8o percent more than Google Play in the second quarter of 2014. There are a number of reasons for this, including the overall spending power of the respective user groups and the fact that many people in emerging markets do not have credit cards, required to make app purchases.
The gap between Google Play and the Apple Store is narrowing, however. Writing for Quartz, tech journalist Steven Max Patterson predicts that Google Play revenues will overtake those of the Apple Store in 2018. Judging by the the growth of activity on Google Play in the first half of this year and the increasing spending power in emerging markets, we could see a new victor in the app wars even earlier.