Asia – The new game changer in iPhone app development

In the first quarter of 2011, the Asia Pacific region, led by China, contributed staggeringly to iPhone sales volumes. In the second quarter of 2011, iPhone sales in Greater China skyrocketed by nearly 250 percent when compared to Q2, 2010.  In revenues, the region accounted for a little under $5 billion (increase of four times from that of 2010) in the first fiscal half. The trends, at that time, were suggesting that the smartphone battle was heating up in Asia Pacific markets.  And, Apple’s iPhone was significantly increasing its reach in the region.

iPhone app distribution, majorly influenced by the reach of devices, till now was mostly concentrated on North America and Europe owing to iPhone’s popularity in the region. But that is set to change as market trends suggest a gradual shift in power centre of app business to Asia as iPhones penetrate wide and deep into the emerging markets of the region. The shift of power to Asia will impact iPhone developers who now have to gaze the app market dynamics of Asia and accordingly sync their app development efforts.

Recently we came across a paper published by Distimo on app distribution and on a little analysis there were some very critical business information found, that would be of interest to any app developer. Here are some of the key findings…

Time for iPhone Developers to Reconsider Asia–

(The download volume in the top 300 apps is illustrated in the world map on a logarithmic scale from dark blue to pink with pink representing the highest number of downloads. The largest country is the United States while the smallest country is Uganda.)

• Most iPhone developers’ currently concentrate on North America and Europe, but it may be time for them to revisit Asia. The United States was and is the prime market for iPhone applications; however China pips ahead of other countries in download volumes to become the second largest market. In addition, a surge in download volumes has been witnessed in Asia alongside a dip in volumes in France and Germany since December.
• South Korea tells a remarkable story. The app download volume in South Korea is higher than Germany and France. In comparison to countries with larger populations like Japan and China, the download volumes in South Korea stands out even more. Moreover, Games which are the most popular apps in many countries are not available in South Korea, implying South Korea can be a profitable ground for non-Games iPhone developers.

Asia Shows Strong Preference for Free Apps-

• The proportion of paid downloads versus the total number of free and paid downloads is markedly lower in Asia than U.S. or European countries. Asia appears to be more price-sensitive, with strong preference for free apps than paid ones.
• App revenue in Asia is about two-thirds of the revenue in U.S. and Japan accounts for greater part in Asia.

Monetizing App, Tad Difficult in Asia –

Proportional revenue from in-app purchases from 200 top selling iPhone applications for Singapore, and Malaysia is higher than in the United States. In China only 34% of the revenue from the 200 top applications is generated from apps with in-app purchase feature.  This indicates that iPhone developers will find monetizing their apps a tad difficult in Asia. However, there is hope for developers, as evidenced in the United States where revenue from in-app purchases rose from 39% to 68% over the last year.

SAME CATEGORIES OF APPS ARE POPULAR IN US & ASIA-

The category breakdown of 300 popular applications reveal that there is no major difference between the United States and Asia market in the popularity of categories of applications.

LOCALIZE CONTENT TO BE SUCCESSFUL IN ASIA-

The regional concentration of applications in Asian countries, with an average of 34% of the top applications are only popular within the region whereas in the US and Europe, only 20% of the applications are regionally popular. The differences become even larger in Asia when observed at the individual country level. Users in China, Hong Kong, Japan, South Korea and Taiwan particularly have strong preference local apps. So, iPhone developers must localize content in order to be successful in Asia.