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The (not-so-) subtle differences between Android and iOS, from a business perspective

Published May 16, 2020

A guest post by Rene Bordas (*)

Introduction

This blog post discusses the two most widely used mobile operating systems Apple iOS and Google Android from a business perspective. A business that plans to develop a smartphone app should consider which of the two systems to develop for, or to develop for both platforms, and how to prioritize the go to market efforts for each platform. Both OS platforms differ widely by the underlying business models of Apple and Google. The typical consumer profiles also differ widely between Android and iOS users. A business needs to understand these differences, and needs to understand its business model and target consumers to make the best investment decision in regard to development spent to generate the firm’s cash flow from an app. This post will evaluate the differences between the two operating systems that a business should consider before starting the development of an app.

Apple iOS vs. Google Android overview

Google’s Android operating system is an open source platform while Apple’s iOS is a proprietary mobile operating system. Apple sells both the hardware and iOS as tightly integrated bundle. Apple’s iOS only works on Apple devices, and no other operating system will run on Apple mobile devices (Teufel, 2013). Google’s approach with the Android OS is to allow other companies like Samsung, LG, HTC and Huawei to develop the hardware to run Google’s Android OS. Google permits these hardware manufacturers to make changes to the default user interface, and to add more functionality. The results are increased flexibility, and a wider choice of device hardware for customers to choose from (Teufl 2013). This wider choice has led to a typically lower price point for hardware compared to Apple hardware due to increased competition. The hardware manufacturers are however not required to provide system updates for the Android phones. This has resulted in safety issues because even if Google provides security patches for Android OS, they cannot be quickly deployed because the patches must first be integrated into the customized versions of the manufacturers. The result is that many devices run with outdated Android versions that have unpatched security vulnerabilities.

Both Apple and Android keep 30% of the app fee sold through their respective app stores and keep also 30% from in-app purchases. For subscriptions both Apple and Google reduce their keep from 30% to 15% after 12 months. Apple launched a new Netflix-like monetization model specifically for games in September 2019 that is called Apple Arcade. This model basically offers access to exclusive games to users for a monthly subscription (Haverland, 2019).

These App store revenue models led some companies to develop so-called progressive web apps (PWA). The web-apps are mobile browser optimized web versions of an app that run on mobile devices. The look and feel are very close to a native iOS or Android app. This allows the business to circumvent the app stores and in-app purchase options, thus the business can keep 100% of the revenue because the Apple and Google stores are not involved. But both Google and Apple of course want to keep app developers use “native” code for the respective platforms and incentivize app developers by giving them access to the wide distribution channel potential these official app stores provide.

Apple and Google also differ in how apps are reviewed to get approved for their respective app stores. Apps in the Apple App store are thoroughly audited for security and malware flaws. Apple forbids developers the use of private APIs (Application Programming Interface) and is disallowing hidden functionalities. In the past the Android platform has been more frequently targeted with malware, due to the open concept of the platform, and the ability to install apps from other sources than the Google Play store (sideloading). In earlier versions of iOS users were able to jailbreak their devices and download apps from outside the App store. But with more recent iOS versions jailbreaking became much more difficult. This is discouraged behavior for any app developers. Google’s Android open approach is a big benefit, and often used as an advantage over Apple’s iOS. However, this openness attracts more hackers than Apple’s iOS (Teufl, 2013). Google allows apps that are even openly advertised that they can be used as spyware, when deployed on another phone without the user’s knowledge. Google’s Android provides APIs that allow a much deeper system integration than it’s possible with Apple’s iOS (Teufl, 2013).

In Spring 2019 Google suspended parts of its business with Huawei involving the transfer of hardware, software and technical services except those that are part of publicly available via open source licensing (Moon, 2019). Specifically, new Huawei phones that ship with Android OS will no longer have access to the Google Play Store, Gmail and YouTube apps. This step could harm Huawei’s hardware business outside China (Moon, 2019). This can also harm app developers that integrate with Google’s native apps if the business plans to expand their app user base into China. This Google-China issue is an important factor that an app developer should consider when deciding for which OS to develop an app for, or which app platform to prioritize.

Analysis

Clarify the purpose on an app

Compared to a few years ago, today there is the global duopoly of smartphone OSs. Nearly 98% of mobile devices are either running on Apple iOS or Google Android (Haverland, 2019). A business needs to decide to develop native apps for both platforms or a hybrid app. One factor that will drive this decision is the purpose of the app and the underlying business model. A business needs to decide to develop an app for consumers as a web shop (like apps from Amazon, Target, Walmart), or will the business offer the app though a freemium model like the news apps from Wall Street Journal or New York Times.

Native or hybrid app

Besides the purpose of the app there are other factors to consider when deciding to build native apps or hybrid apps. Native apps, which are apps specifically developed for Apple iOS or Google Android, run faster on the devices. The native apps can access almost anything on the device and use this to deliver functionality to the app user. The deployment of native apps through the corresponding app stores are typically less risky. What speaks against the development of a native app are the higher cost to develop and maintain the app and the requirement of specific skills to develop either an Android OS or an Apple iOS app (progress.com, 2020). Typically, a business would need two separate development teams, one for the Google Android app, and one for the Apple iOS app. The administrative overhead to run two teams can be significantly costly. The overhead is needed to ensure that both teams develop the apps similarly in regard to functionality, look and feel to ensure that the user experience is consistent when using the app on an Android and iOS device.

The Google Android system has many versions and variants. The latest version is Android 10, previous versions were named after sweets (Pie, Oreo, Nougat, Marshmallow, Lollipop, KitKat, Jelly Bean, Ice Cream Sandwich and Gingerbread). Variants are Android Go for lower-end smartphones, and Android One that comes with the promise of frequent security updates for three years and OS updates for two years. Then there is Wear OS for smartwatches, Android TV for smart TVs, Android Auto for cars, the Android Open Source Project (ASOP) as core Android OS without proprietary Google services (mostly used in China), Google Home for home automation and Google Assistant for smart speakers.

Apple offers a similar suite of operating systems for various devices. Apple iOS for smartphones, iPadOS for tablets, Watch OS for smartwatches, tvOS for smart TVs, Apple car for cars and the Home Pod smart speaker. A huge advantage of the Apple iOS over Google Android is lack of fragmentation across available versions. Apples hardware typically receives iOS updates for 4 years. Apple iOS is also known for its stronger security and data privacy. With Google Android, there is a large number of manufacturers of devices and their corresponding customization of Android. This led to the fragmentation of the used versions. From an app developer perspective this has to be a concern because it’s not always clear that the Android app will work smoothly across the hardware and Android OS landscape. In a worst case the app developer has to make changes to overcome technical issues. Because of this fragmentation the users are updating their devices at a slower pace to the latest Android OS version compared to Apple OS users. But Google has over the last couple of years made changes to boost the adoption and limiting the fragmentation. Because of these efforts a business can reach approximately 90% of devices if the app is backward compatible down to Android version 5.0 “Lollipop” (Haverland, 2019).

Market share of iOS and Android

Another aspect to consider is the market share of the two leading operating systems. In 2019 73.3% of mobile devices ran Android, and 25.89% iOS (statcounter.com). The Google Play Store had 2.4 million apps available (verge.com). In addition to the Play Store that are hardware vendor specific stores like the Samsung Apps or Amazon’s Appstore. These require the use of specific software development kits (SDK) (Haverland, 2019).

With Apple’s iOS the apps are exclusively available only through the Apple App Store. Apple iOS users in 2019 spent approximately $120 billion on apps, and there are approximately 2 million different apps currently available for iOS.

As mentioned above, the market share of Android devices is by far higher than for Apple iOS. However, app developers benefit from higher earnings on Apple’s App Store in comparison to Google’s Play Store. It is estimated that the top 100 highest-earning apps on the App Store generated on average 65% more than the top 100 highest-earning apps on Google’s Play Store.

In Q1 2019 the top 100 iOS apps generated on average $84 million, compared to average of $51 million for the top Android apps. And when excluding game apps, the difference is even more drastic between the two platforms. The top grossing non-gaming app for Apple iOS overperformed the top 100 Google Play Store by 232% (statista.com).

For iOS app distributions there are two different models available. One model is the Apple Developer Program which manages the distribution of apps through the iOS App Store to the consumers. The second model is the Apple enterprise program through which apps can be distributed to a specific set of users only. This second method is typically used by companies that develop apps internally for their own employees (Haverland, 2019).

Hardware device features

A business should also consider the hardware functionalities of the device an app will run on like support of the new 5G standard, NFC, additional extended storage, battery capacity and replacements. A business customer that wants to use the app in an environment where the device is used over several hours will be concerned about the battery capacity (e.g. a restaurant that wants to use the app in a table service scenario over many hours). It will make a difference if only additional batteries need to be procured to easily swap them out mid-shift (many Android devices support this), or if additional devices have to be procured because the battery can’t be replaced (all Apple devices).

Monetization from apps

In 2019, 96% of consumer spending in the top non-gaming apps were made through in-app subscriptions. In 2019 for US Apple iOS, 97% of consumer spending on non-gaming purchases in the top 250 apps were generated through apps with subscriptions. For Google Play this spending was slightly lower at 91% (App Annie, 2020). Video streaming and online dating apps like Tinder and Netflix are also very successful categories in regard to in-app purchases and were on the top of the non-gaming consumer spend chart. In 2019, 79% of the 250 top consumers spend apps in the Google Play store generated their revenues with in-app subscriptions, for Apple iOS it was 94% in 2019 (App Annie, 2020).

There are several different monetization models that businesses use to monetize on their apps that are platform dependent (Apple, Android) or platform independent.

Platform dependent

The “pay per download” method was one of the earliest methods for businesses to earn revenue from their apps. A user has to pay for the app through the platforms app store to download the software. The benefit is that the revenue is generated upfront, however this model does not lead to a consistent revenue stream.

“In-app purchases” allow the business to offer a free download, but offer additional functionalities, exclusive content, ad-free app usage etc. when the user makes the purchase though the app. Both Google and Apple will keep 30% of that fee.

An emerging method is the “subscription model” where the users sign up for a subscription through the “in-app purchases” option. This is a very desirable model because it allows for a consistent revenue stream from app users. The above platform dependent models require the business to develop a native app because of the tight integration with the platforms payment services.

Platform independent

Businesses that want to develop a hybrid app can use several platform independent monetization options. A widely used method is called Freemium. This is very similar to the above mentioned in-app purchase model. Businesses can add functionality to the app that directs the user to a separate website outside of the app to make a purchase. Spotify is one of the larger companies that uses this model. Mobile advertising is a method that works also for platform dependent apps. Advertising can be used to generate ad-revenue from marketers. The ads are shown to the users of the app while using it.

An interesting way to drive revenue is through sponsorships. Revenue is generated each time one of the app users signs up with the sponsor (Haverland, 2019). Instead of selling a physical product through an app, or relying on subscriptions a business can monetize on the data the app collects from the user. User data is very important to many marketers to either better target their ad campaigns, or to analyze user behavior. The user data is anonymized and only data elements like device type, operating system, country, mobile operator etc. are shared. This model only drives significant revenues once an app reaches 50,000 daily active users (DUA) (the tool.io).

Conclusion

Any business that is considering the development of an app has to first answer how to monetize the app. The business needs to develop a business model and plan that will allow revenue to get generated to at least cover the cost of the development. There are only two major platforms — Apple and Google Android — that need to be seriously considered. Once the business model and monetization are determined a business can make a decision to develop either a hybrid app, or a native app. A business should answer whether or not developing a hybrid app that gets around the app store 30% fee in conjunction with adding an external subscription method will make the app succeed. For a native app the business then needs to decide to develop for both platforms or only one. When developing two separate native apps the business will have to find ways that the additional development cost for developing two native apps because of the more convenient user experience by using in-app purchases outweigh the relatively simpler approach of a hybrid app.

References

(*) This blog post initially appeared as an essay for one of my courses at Florida Atlantic University. It is being shared here as a guest blog post with the author’s consent.
All views and opinions expressed in this post are those of the authors and do not necessarily reflect my opinion or the official policy or position of any agency, organization, or company.

Featured image: photo by Luis Villasmil on Unsplash

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