Why Don't Android Users Buy Apps?

A new Distimo report is out and being widely discussed today. The issue being talked about is the fact that Android users don't buy paid apps and developers are making much less money on Android than the iTunes store. Because of this most Android developers are relying on Advertising to monetize their apps.

This isn't news conceptually but it's brought into stark relief by some of the numbers in the report: 

  • 80% of all paid [Android] applications have been downloaded less than 100 times
  • Only two paid Android applications have exceeded 500,000 downloads (but under 1 million) worldwide to date
  • Google Maps is the only application with more than 50 million downloads . . . making it the all-time most popular [Android app] 
  • The refresh rate of top application charts is significantly higher in the Apple App Store for iPhone than in the Google Android Market. During the month of April, there were 94 distinct applications with a top 10 (free or paid) position in the Apple App Store for iPhone in the US; there were only 26 distinct applications that reached a top 10 position in the Google Android Market.

Screen shot 2011-05-27 at 2.16.14 PM

What the final bullet and the chart immediately above indicate is much less movement at the top of the charts in the Android Market than on iTunes. It's thus harder to crack the top of the charts and get exposure on Android in some respects.

Why is this happening? Why aren't developers able to sell apps on Android? Are there two radically different "cultures" that have been created? Are the demographics of iPhone and Android owners dramatically different? 

AdMob found the following in a user survey released a year ago (1/10) about the differences between iPhone and Android users: 

Screen shot 2011-05-27 at 2.22.06 PM

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Here are data from Nielsen (6/10) on income and gender differences between iPhone and Android owners: 

http://blog.nielsen.com/nielsenwire/wp-content/uploads/2010/06/smartphone-demo.png

According to the Neilsen data above, Android users were (in June, 2010) less affluent than iPhone users and somewhat more male. That may have changed given Android's rapid penetration and growth. But I don't have any more recent data.

In November 2010, Mobclix put out additional data, making the following statements about Android users: 

  • 60% of them in the US were under 34
  • 8% switched from iPhone
  • 45% reported their Android phone was their first smartphone 

Taking all these disparate data points together, what they suggest is that Android users are younger and generally less affluent than iPhone users. However, a major contributing factor to the Android monetaization failure is the absence of a "one-click" payment system for Android. Most people don't have Google Checkout accounts and so may be unwilling to set them up when they encounter paid apps. (Google Wallet could ameliorate this over time.)

Yet the fact of so many free apps -- indeed a "culture" dominated by free apps -- contributes to an expectation that most things will be free in the Android market. 

None of these points entirely reveals why Android and iTunes paid apps are so far apart but it's the best I can do right now to explain the mystery.