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How Apple’s App Store can win or lose the next ten years (Part 1)

by Nathan Slavik on Jul 10, 2018

It’s only been ten years since the iOS App Store launched, and in that time its impact has been enormous. Mobile apps have shifted the way brands and consumers interact over the last ten years, and the iOS App Store has been the portal. The App Store changed what we thought possible and has shaped our behavior over the years.

That’s no hyperbole—the numbers back up the how much the App Store changed our lives. According to App Annie’s recent report, in the decade since its launch, over 4.5 million apps have been released via the App Store, which has resulted in over 170 billion downloads and $130 billion in consumer spend.

While numbers like those are certainly impressive, the past decade for the App Store hasn’t always been smooth sailing. Apple has run over its fair share of speed bumps over the years—beginning with overcoming the initial doubts of Steve Jobs—and there are some looming challenges ahead for Apple to overcome in order for the App Store’s teenage years to be as prosperous as its first ten. To be clear, any rumors of the death of apps are greatly exaggerated, but Tim Cook and company do have some hard work ahead of them if they don’t want the iOS App Store to eventually go the way of the iPod.

In part one of our two-part series on the future of the App Store, we’ll take a look at the opportunities and challenges, beginning with Apple’s long-standing app store war with its Silicon Valley neighbor, Google.

iOS vs. Google Play: The Battle for App Store Supremacy

While the iOS App Store was indeed first, the launch of Google’s app store, Google Play (formerly called the Android Market), followed just months behind. Since then, the two have been locked in an ongoing battle for app store supremacy, with both solidly in control of their respective areas of strength: downloads and consumer spend.

Google’s hallmark is the download. Google Play first surpassed the App Store in global downloads five years ago and has been increasing its lead ever since. In 2013, Google Play claimed a 54% share of downloads, but by 2017 the gap had widened even further, with Google Play representing a 70% share over the App Store. Google Play’s download lead is due in large part to its popularity in emerging markets like Brazil, India, and Indonesia, which represent large user bases that are actively downloading new apps as they come online, discover, and test them out.

ios-v-google-play-app-annie

Source: App Annie

Apple’s strength is maximizing consumer spend in the App Store. In 2013, the App Store held 69% of consumer spend worldwide vs. Google Play, and it has essentially held onto that margin since then. In contrast, the App Store is popular in more developed markets like the U.S. and South Korea where users aren’t as actively downloading new apps, but are deeply engaged and investing in the apps they’ve decided are their favorites. This dynamic is what brought over $42 billion in consumer spend into the App Store in 2017 and allowed Apple to pay out $26.5 billion to developers that year.

While Apple is happy to be in control of the consumer spend side of the app market coin, particularly as their consumer spend is projected to hit over $75 billion by 2022 and more of their revenue shifts toward digital goods and services, they can’t give up the download fight completely. Emerging markets will be the primary fuel for the estimated growth of the number of total global devices, from the current roughly 4 billion devices to over 6 billion, representing a flood of new users, developers, and publishers that Apple wants inside their ecosystem as their markets mature and consumer spend increases.

insights_top-countries-downloads-app-annie

Source: App Annie

Apple will need to respond to this global growth by making the App Store even more global itself, far beyond the localization materials and services it currently offers. For example, Google Play, which, as we wrote above, already services a more widely global audience on the whole, offers a soft launch feature through the Console that allows developers to test early versions of an app in a new market before fully launching—a feature that Apple would be wise to replicate.

Similarly, developers are already routinely creating “lite” versions of their apps, which is particularly useful in areas where bandwidth cost and limits are more of a factor. In regions where lite apps are in higher demand, Apple could roll out a “lite” icon for App Store pages that helps interested users immediately identify them. Both are relatively small examples, but the larger point should be clear; the path ahead for Apple will mean a constant battle against Google.

But if Apple wants to continue to succeed in the future, it’ll have to address more than just Google Play. In part two of our series, we’ll examine the challenges the App Store faces in China and with app discovery.

Nathan Slavik is a Bay Area-based writer who has been covering new and emerging technologies for over a decade.

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