Monday, June 13, 2016

Alphabet Inc’s Google Play vs. Apple Inc.’s App Store: The Battle Heats Up

Subscriptions are apparently the main focus now

Next week is Apple Inc.’s (AAPL) annual Worldwide Developer’s Conference, and it’s being reported that AAPL plans to implement some major changes to both the platform itself and arrangements with developers. Tech geeks, app developers and investors alike are bursting with anticipation, especially considering it has been years since the last notable update to the App Store.

Of course, not to be outdone by AAPL, it’s no surprise that Alphabet Inc (GOOGL, GOOG) is also coming out with a fresh update to its Google Play Store developers arrangement.

Clearly, AAPL and GOOG are vying for the attention of app developers, both hoping to attract and retain top creators with revised arrangements that ultimately lead to more money for everybody involved. The problem, so eloquently stated by DZone, is that “arguing which mobile platform is the most popular among developers can be like debating religion — much heat, little light, and even less information.”

A few things are certain, though: more developers create apps for Android devices than for iOS. According to a Forrester survey last November, 70% of app developers create for Android, compared to only 51% for iOS. Throughout the world, Android remained the most-supported platform, until last year when survey responses indicated a slight shift in the U.S. in favor of iOS.

Subscriptions Will Now Be Big for App Store, Google Play Developers

According to reports from Recode, the most major change to the App Store and Google Play business models is an increase in revenue-sharing percentages for developers of apps that include subscription-based services.

AAPL and GOOG will both be giving developers a raise from the current 70/30 revenue-sharing split to 85/15. While that’s a nice bump for developers, it won’t take effect for iOS apps until a user has remained subscribed for more than one year. So, during that first year the existing 70/30 split will remain unchanged.

Android developers, on the other hand, will begin receiving their 85% revenue split right from the start.

For developers working with both platforms, particularly smaller outfits with fewer users and even fewer subscriptions, that year could be a major point of contention, pushing developers toward GOOG and Android.

Considering the never-ending battle between these two tech titans, AAPL forcing developers to wait a full 12 months before collecting their 85% revenue share doesn’t seem to hold much appeal alongside the instantly active arrangement offered by GOOG.

Bottom Line on App Store and Google Play Developer Changes

Unless AAPL management reconsiders and removes the 12-month continuous-subscription requirement, there’s a definite possibility that a number of iOS developers may jump ship and head over to team Android. After all, the major motivation here is money, and while the 85/15 revenue-sharing split has the potential to result in better-quality apps and more dedicated developers, that dangling carrot on a stick isn’t big enough to detract attention from GOOGL.

As it currently stands, there are more Android developers than iOS developers across the globe, and it’s only recently that iOS has taken a small lead in the U.S. for the first time ever. But, when the reported changes to App Store and Google Play business models are put in place, AAPL’s marginal lead may very well disappear.

GOOGL, on the other hand, is in no danger of losing developers.

Article originally appeared on InvestorPlace (06/13/2016)

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