China ranks 2nd in worldwide iPhone app downloads (distimo)

23 June 2011 23 h 12 min 15 comments

The Chinese mainland has become the world’s second-biggest market for iPhone application downloads, behind only the United States, according to Distimo, a Netherlands-based mobile analytic company.

This result shows the wide popularity of Apple Inc’s smartphone in China, the world’s biggest mobile phone market.

However, most iPhone application downloads in the domestic market are free, according to the app store analyst.

From January to May this year, iPhone application downloads on the Chinese mainland grew rapidly and the territory has become the second largest market after the United States in terms of iPhone applications downloads, said Distimo. Over the last six months China surpassed countries like France and Germany in terms of download volume. China is followed by countries such as South Korea, where the number of apps downloaded per device is one of the highest worldwide.

The real Chinese user base of iPhone app downloads could be much higher (than the official 4 million iphone subscribers through China Unicom) because many Chinese users register with US Apple accounts, industry insiders said. Figures must also take in account that many Chinese users ”jailbreak” their iPhones to download and install applications directly online, without going through Apple’s online store.

(From Distimo. The download volume in the top 300 most popular applications is depicted in the world map above 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.)

Mostly free apps

The proportion of paid downloads and the overall revenue of Chinese and Asian markets still lags behind that of the United States and Europe. The Netherland-based analytic firm found that customers in Asian countries including China are generally more price-sensitive and prefer to download the free equivalent of an app rather than pay for a premium ad-free version.

According to Distimo, “The average download volume of the 300 most popular applications (free and paid) in all Asian countries combined is about equal to the average volume in the United States. However, when looking at paid applications only, this ratio drops to one-third, i.e., iPhone users in the United States are more eager to pay for applications. Excluding Japan, this figure even drops to one-sixth.”

In addition, the Asian market has shown aversions to the in-app purchase model, with exception to Singapore and Malaysia. Revenue from apps that feature in-app purchases in the US was 68 percent in May 2011. This percentage is well above most Asian countries like China (34 percent), Sri Lanka (27 percent), and Taiwan and Thailand, which both registered at just below 50 percent. Singapore and Malaysia broke the mold, however, both generating more in-app revenue than the US. Singapore, for example, had in-app revenues of 79 percent.

Distimo’s report shows that free to paid ratio is only 0,99% in China and the average app price is 2,56 US$ against 3,33 in Japan and 4 in USA or Europe.

Chinese content needed

Compared with China’s App Store, which opened last year with limited content and no music or videos, Apple’s US online store provides more multimedia content and social networking functions.

Distimo says that there are no significant differences between the 300 most popular App Store categories in the US and Asia. The research firm suggests that iPhone developers can offer ‘the same type of applications’ across these markets. But unlike Europe, South America and the U.S., where the top apps are roughly the same, the most popular iOS apps sold in Asia are only popular in Asia, with apps such as iBunko, Taiwan Mahjong, taiko no tatsujin and ComicShelf.

In other words, localization is key to becoming popular especially when considering countries like China, South Korea, and Japan.

Thats an opportunity for Chinese and Asian firms which have closely watched the wave of enthusiasm for the iPhone and want to obtain income through localized applications, analysts from Distimo said. For example, Shanghai-based Shanda Games may debut its first games for the iPhone next year.

But local developers looking to target the booming apple apps market will have to find an economic model. With the vast majority of Asian markets generating low revenue percentages form in-app purchases, Distimo said, “developers can not yet easily monetize by including in-app purchases in Asia.” Distimo added that this trend could quickly change, pointing out that in June 2010 in-app purchases only accounted for a mere 39 percent of revenues in the US. For the time being, however, Distimo recommended focusing on advertising revenues to monetize apps, a piece of advice which is still promising as developers could ride the recent Asian surge in download volume.

Another solution could be virtual currencies as well as merchandizing. That’s the approach being taken by Rovio with Angry Birds which will arrive soon in China.

 

China will be Apple’s biggest market 

According to computerworld, “China already accounts for around 10 percent of Apple’s revenues, and this is growing insanely fast.” Two years ago Apple generated just $1 billion business in China. Speaking during Apple’s Q2 financial call, Apple’s COO Cook said: “Greater China saw iPhone sales being up over 3x, about 200 — almost 250%, against 150% in the USA. And this catapulted revenue for the first half or first fiscal half in Greater China to just under $5 billion, which is up almost 4x year-over-year.”

This trend could accelerate if the iPhone 5 is distributed by China Mobile, the world’s largest network with over 400 million subscribers. And China could be Apple’s major market in the following 3 years.

Ticonderoga Securities analyst Brian White believes the high-end mobile phone market in China offers 100 million to 125 million subscribers. “We believe the ramp of the mobile Internet in China will be one of the great wonders of the tech world over the next decade and the country has clearly caught “Apple fever” that we believe will only accelerate as the company expands it carrier base to include both China Mobile and China Telecom.”

Full Distimo report 
 
SOURCES: Distimo, Shanghai Daily, english.cri.com, China.org.cn, computerworld.com, paidcontent.org, signalnews.com (23/6/2011)

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