If you want to make money with apps, go BlackBerry

An interesting study caught my eye. When taken at face value, it proves that in order to really make money with apps you have to switch to the BlackBerry platform.

A company I never heard of, MPlayit (its URL curiously opens a Facebook page), is apparently creating an “app discovery app” on Facebook and polled its users about how much they’re willing to spend on apps.

Note immediately that this poll represents only the top of the market: the participants are people that are so interested in apps that they’re willing to use all kinds of tools to discover them. Besides, they’re all on Facebook. So they’re not representative of smartphone users at all. Still, they form an interesting market for app developers, so the research is relevant after all for anyone who’s trying to make money with apps.

Anyway, the result that caught my eye was the median price users were willing to pay. On iPhone it was $1.99, on Android $2.72, and on BlackBerry no less than $5.99!

The conclusion must be that if you really want to make money with apps, forget about the iPhone and switch to BlackBerry.

That’s ... unexpected. And interesting. I wonder how the Apple fanboys are going to talk themselves out of this one. Everybody knows only the iPhone is important, after all, so this report must be wrong.

The high price BlackBerry users who are already interested in apps are willing to pay is understandable. App-savvy BlackBerry users have nearly all got their phone from their employer, and they’re already used to downloading and using productivity apps. So the higher median price is likely to be caused by a cultural difference between BlackBerry and iPhone users.

Another interesting tidbit is the share of games in the “most popular apps“ (no definition given, unfortunately). On Android 21% of these apps are games, on BlackBerry 27%, and on iPhone a staggering 68%.

That confirms something I’ve been thinking about for a while: one of the unique selling points of the iPhone is that it’s a fantastic gaming platform. When I’m going to switch away from my iPhone (probably to an HTC Legend) I will nonetheless keep it around exactly because of its superior game quality.

Still, this could be a danger, too. If the iPhone becomes a gaming platform first and foremost, that might hurt other use cases, not so much in the mind of its users as in the mind of app developers. And that, in turn, might strengthen the iPhone’s profile as a gaming platform primarily.

We’ll see. The iPhone still has plenty of chances to break out of this circle. But it’s something to keep an eye on.

This is the blog of Peter-Paul Koch, mobile platform strategist, consultant, and trainer. You can also follow him on Twitter.
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1 Posted by CristianoBetta on 2 April 2010 | Permalink

You are mixing intent with actual actions. All this says is that iPhone users are either trained for low prices, or are cheap bastards (I know I am).

It also does not take into account volume. How many apps does an iPhone user buy vs a Android or Blackberry user. I know a lot of people who buy apps on impulse on an iPhone. Does that happen on a Blackberry too?

Intent is a nice thing to measure, but without good numbers on the correlation to actual sales it's quite useless.

2 Posted by Roland van Ipenburg on 2 April 2010 | Permalink

How much consumers are willing to spend on an app doesn't matter if the competition on a platform is driving prices down well below that point. There's currently probably a huge surplus of iPhone apps.

3 Posted by Cristiano Betta on 2 April 2010 | Permalink

I agree with Roland.

I think there is 2 things worth noting here. First, competition is driving prices down on the iPhone platform and training people to expect to pay less. And secondly, who guarantees an app developer that something similar won't happen on the BlackBerry if it reaches the ass of sales that is required to make an app even slightly successful?

4 Posted by Zach Leatherman on 3 April 2010 | Permalink

Not just volume in terms of how many apps an individual user will buy. But volume in terms of how many available users there are that regularly purchase apps.

If the average iPhone user buys 5 apps at $2 each (or 5 users that buy one app at $2), a dev would make more money than selling a $6 app to a single Blackberry user.

You can't make the claim that the real money is on Blackberries if you don't have any statistics on volume.

5 Posted by Jaanus on 3 April 2010 | Permalink

I would like to point out that making such conclusions based on asking users is horribly inaccurate. It's been scientifically proven that what people say they do, and what they actually do, often do not match. I would not be surprised if actual purchase behavior was different from stated behavior (and I have no idea in which direction).

Even if the facts in the article are correct, another mistake in the post is that you do not multiply the price by volume. Revenue is unit price * units sold. To do anything meaningful with these per-unit price numbers, we'd need to know how many people are on each platform. Lower price per unit does not matter if there are more people. I myself can only guesstimate that at this point in time there are more iPhone than Android users, but I have no idea how they relate to Blackberry.

You like calling out other people's bullshit and rightly so, but I think this time it's you whose post is bullshit for the above two reasons :)

6 Posted by Alex on 5 April 2010 | Permalink

I am not as quick to dismiss these findings as some of the commenters above are. Even if the actual pricing numbers are off, what's important are their relative levels. The fact that many 'Berry users would spend 3 times as much on an app compared to what an iPhone user would spend means something. The correlations will obviously change with supply and demand to perhaps bring them closer together, but I agree with PPK that the 'typical' BB user will always be willing to spend more than the 'typical' iPhone user.

I think that RIM's dominoes are all lined up and ready to go, all that's needed to set them off is a new hardware/software package with some serious oomph. If they should take one lesson from Apple it's that an annual hardware update is key to success. Their current phone lineup is falling behind.

7 Posted by dumb on 5 April 2010 | Permalink

Apps have $0 marginal cost. An equivalent iPhone app will more than make up the difference in price because there are so few app purchasers on BlackBerry compared to iPhone.

$5 x 10 = $50
$2 x 1000 = $2000.

8 Posted by Joost Diepenmaat on 6 April 2010 | Permalink

"Revenue is unit price * units sold."

Correct.

"To do anything meaningful with these per-unit price numbers, we'd need to know how many people are on each platform."

Actually, that won't give you much more useful info either, even if you somehow factor in the number of apps sold per person, since it's not at all a given that all those people actually will buy YOUR app. Especially not if there's lots of competition.

Something like avg app price * # apps sold / # of available apps would give a (still useless) average of how much an app will make for its developer.

9 Posted by ppk on 6 April 2010 | Permalink

I don't quite understand the arguments of those who disagree with me.

1) Annually, more BlackBerries than iPhones are sold.
2) BlackBerry users are already used to apps, although these apps are predominantly in the business sphere.
3) The research was about people who were interested enough in apps to follow a Facebook group. Not your average user group, but the most important one for app creators.

Therefore BlackBerry users will buy *less* apps than iPhone users? Why?

That only makes sense if percentually, vastly more iPhone users than BlackBerry users are interested in apps. In other words, if the group that was researched is tiny to non-existent on BlackBerry, and huge on iPhone.

That's possible, I suppose. But I prefer some hard figures here.

Absent those I will continue to assume that interest in apps on BlackBerry is roughly equal to interest on iPhone, and that therefore BlackBerry apps will make their creators more money than iPhone apps.