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State of the Ecosystem

At WWDC 2016 Apple offered a set of new data points to illustrate its ecosystem’s robustness.

First, the number of registered developers increased by 2 million in the last year to a total of 13 million. That is a growth rate of 18%. To compare this total consider that Oracle claimed in 2014 9 million Java developers and IDC claimed in 2014 there were 18.5 million software developers in the world, of which 11 million were professional software developers and 7.5 million were hobbyist developers. It’s therefore possible that Apple’s “market share” among developers is close to 70%.

Second, App installs have now reached 130 billion. The cumulative growth is shown in the graph below:

Screen Shot 2016-06-16 at 12.25.11 PM

The rate of growth is also shown in the following graph:

Screen Shot 2016-06-16 at 12.33.35 PM

Note that the rate of growth continues to increase and is now above 30 billion/yr. It turns out that apps continue to be a popular download item. The size of the audience continues to grow (see graph below) and it’s therefore understandable that activity in the store continues to grow.

Screen Shot 2016-06-16 at 12.32.44 PM

Third, the rate of payment to developers has also increased to over $20 billion/yr., with the total payments having reached $50 billion. Screen Shot 2016-06-16 at 12.25.52 PM

The graph above shows the derived payment rate (in green) relative to the download rate (blue). Although not completely parallel, the overall correlation is plain to see.

Fourth, there are more platforms than ever (four device and three services). As a result, Apps and services continue to outgrow traditional content revenues. Gross revenues for iTunes/Apps/Software/Services/Licensing is shown below:

Screen Shot 2016-06-16 at 12.26.29 PM

Overall, economic activity transacted directly through Apple’s platforms is approaching the run rate of $40 billion/yr. It continues to grow at about 20%, so it’s foreseeable that it will reach at least $50 billion/yr.

It’s hard to compare to other ecosystems as metrics vary but this rate alone places Services as one of the larges businesses in the world (service or otherwise).

There are other ecosystems “on top” of iOS which transact outside the Apple systems (and hence are not reported in the total above). These include Facebook, Google, Uber, Amazon and other economies which use iOS devices to enable engagement. These add up to hundreds of billions of dollars in transactional value. My estimate is that all mobile services are at least $250 billion/yr today and will reach $800 billion/yr in 2020. Apple is and will continue to be the home or enabler to the majority of this revenue.

But the more profound point to be made is that this ecosystem relies mainly on direct payments by the beneficiaries of the service or content. Apple contents itself with the $35 billion it can transact through its own storefronts because it feels that the business models are compatible with its brand.

When it comes to all the ways of “monetizing” platforms, this may be a very conservative strategy but it’s one that also avoids the potential pitfalls of social scandal.

  • Luis Alejandro Masanti

    Thanks! A quite different vision from WWDC16’s keynote!

    (Almost) Best idea: “ It’s therefore possible that Apple’s “market share” among developers is close to 70%” (from my personal point of view.)

    IDC/BI/et all love “market share” comparisons… but I doubt they will like this!

  • http://www.isophist.com/ Emilio Orione

    Great analysis as always, glad to hear you again.
    Apple quietly announced before wwdc that they will introduce payed advertising in the app store and they announced at wwdc a new app store inside messages (and a new traditional content store for education in swift playground for iPad).
    They also revamped news and apple music.

    So Apple is already exploring new ways to “monetize” its platforms.

    For now they aim to keep the money for app advertising today collected by google and Facebook, but I bet they will find other ways in the future, they just have to engineer brand compatible ways of doing it.

  • BMc

    Becoming one of the largest services business in the world, and as noted, paid for with “direct money”, but it still flies under the radar – amazing! Then again, it is always better if your competitors ignore what you are doing while you quietly grow.

  • David Leppik

    I’m pretty sure the number of “registered developers” is much bigger than the number of actual developers. For example, I’m pretty sure I count as a registered developer even though I haven’t touched a line of Objective-C in over a decade, simply because I have a copy of Apple’s developer tools. You still need an account to download them (I just checked) and they include a number of command-line tools (such as git) which you need if you’re using a Mac as a Unix workstation. It’s difficult to do Java development on a Mac without Apple’s developer tools. Hard-core web site administrators also need to be “registered developers” to test PHP on their Macs.

    That’s not to say that the growth isn’t there. But it appears to be counting everyone who has downloaded Apple’s developer tools, and there are a lot of reasons to do it other than to write Mac software.

  • Fran_Kostella

    I can’t say much about the numbers as they are, but I don’t think the basic story is possible to use as a basis for reasoning about app development. Of course, that is interesting to me as a developer, and I’d imagine those on the outside of the development business would like to know about the same details. Perhaps not, I don’t know.

    I’ve been doing iOS development since 2010 and have built dozens of apps. The vast majority of them were done as work for hire and provides over 95% of my income. I’ll work in the ecosystem as long as I can, but it isn’t clear at all to me that I’ll be able to make a living there for more than a few more years. I really do mean that it isn’t clear, not that I won’t be able to work there. That’s fine, but I do feel that it gives me a different perspective about the health of the ecosystem. Good for Apple, but not that healthy for nearly all developers.

    The growth of apps isn’t meaningful to me. I’d like to see the data partitioned such that I can see the age of the app, the number of apps released by that developer, number of downloads, number of crashes, type of developer account. I’d also like to be able to see if the app generates money, if it has ads, if it uses IAP or subscriptions, if it has recurring payments or consumables, the number of times the app was shown in a search in the different app stores and iTunes. How many times does a user download the app? How many upgrades? And so on…

    I really want to be able to analyze the apps and break out the dead and useless ones so I can get a better view of what makes a viable app. I think that at least 95% of the apps are effectively dead and useless free apps. Every training course and book shows users how to get an app into the store, so if we have 13 million “developers” then we have many millions of those. Then there are the copycat apps that try to cash in on some fad app. There are tons of apps that are built from public source repositories with sloppy retitling. So, just from the app developer side it looks like mostly all noise. I spent a few month getting a feed of app that go free and there are tons of Tier 1/2/3 apps that after a month go free, and most are junk, but 5% or so are real non-junk apps someone tried to put in the store to make money. Which made nothing and got no reviews. I guess that they got few downloads.

    Once I can filter the data to only those apps that pull money through the system, I’d then like to do a breakdown into app category and developer details. We don’t get hard data on this from Apple, but my reading and talking with people suggests that the lion’s share goes to a handful of developers, a hundred or so.

    I’d like to get some real insight on the details so I can strategize. I and others I know have many apps they’d love to try to make into paying apps, but the cost of development is such that we have to go on scanty knowledge. My experience and gut feeling is that it mostly isn’t worth it. If you love your idea and can afford the effort, then go for it and hope you are lucky. But you should assume that an indie developer can’t make decent income on indie apps unless you have something that gets you into the “inner circle” of apps. And I’ll just ignore the implication of the diverging download vs. payment lines.

    This system works for Apple, more app and more downloads are good for them to tout. More payments suggests that there is more for developers, but I don’t see it getting spread around very much, it looks like the same big companies get the bulk of it so it works for them. The recent store improvements are good, but are not likely to change any of this. Lots of indie developers are leaving or avoiding the app store, which is a pity. Apple doesn’t owe any of us a living, but it just seems like they are using up the seed corn for no good reason, it isn’t like an emergency or anything requires it. If they wanted indie developers to thrive they could help a little, but they don’t.

    I’ll do a couple of more apps to see if I can get a cumulative income that makes it worth the effort. I don’t mind some risk and I really love the platform and the devices, and I do get a small halo effect being able to show quality apps to my work for hire jobs. But right now it does seem like I should transitioning to something else where I can make a better income as an indie.

    • Sacto_Joe

      Thanks for the comment! You raise some interesting issues.

      Speaking purely as a consumer, I’d love to be able to weed out the 95% “junk” apps. Do you know any way that we can do that?

      Maybe a “good app” app put out by some kind of affiliation between good app builders? Sort of a Consumer Reports of the app world?

      • Fran_Kostella

        I wish I had an answer for you, I don’t. As others have pointed out, it is like the early web, before Google. Nobody seems to have a good solution. Apple knows more than anybody about the apps, all the data I mention, plus info about links to app over the web and in-app. So they could possibly do something.

        As much as it isn’t a full solution, I do use AppShopper’s RSS feeds to get a limited amount of data. For example, I did an experiment for a few months of monitoring all the free apps that appear in their feeds, just to get an idea of what was happening. After scanning a few hundred app entries a day for a few months I can say that there is a lot of utter crap going into the store. Sometimes I’d see 50 versions of the same app with minor differences, and it was common to see apps that were copied from GitHub or were essentially “Hello World” coding tests. I bet you could wipe out 75% of the least frequently downloaded apps and nobody would notice.

    • DizzyLondon

      Suggest you look at VisionMobile for the sort of info requested

  • Get Serious

    Great breakdown of the visible app market. There are also the direct to customer apps developed and deployed outside of the AppStore for business and enterprise. I would imagine that market is smaller but growing faster with the likes of IBM developers like Fran_Kostella building custom apps.