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Monday, August 02, 2010, 05:00 pm PT (08:00 pm ET)

Piracy problems undermine Android's growth against iPhone

Despite strong growth in first half of 2010, Google's Android platform is still not attractive to commercial development because of rampant app piracy and limitation in security and international sales through Google's store.

According to a report by Jay Yarow of Silicon Alley Insider, a developer of one of Android's top ten apps is seeing 97 percent of players in Asia using an illegal copy, 70 percent in Europe, and 43 percent in North America.

The game, named Radiant, sells for just $2.40 but Android users find it more attractive to pirate the game, given that its so easy on the Android platform to steal developers' work without paying anything. Google's planned solution is to allow developers to phone home at regular intervals to determine if they're pirated or not, shutting down if they're deemed to be pirated.

Apple's iOS App Store simply ties purchased apps to the user's iTunes account, making piracy difficult enough for casual users to prefer to actually buy apps instead, without any phone home authorization steps. The fact that most iPhone apps are priced low means that developers can make money in volume sales, because most apps aren't being pirated. Piracy largely prevented mobile software from ever being viable prior to Apple's App Store.

Problems beyond piracy

Creating a legitimate software business on the Android platform is difficult not just because of rampant piracy but also because Google only supports paid app sales in 13 of the 46 countries it is available from: Australia, Austria, Canada, France, Germany, Italy, Japan, Netherlands, New Zealand, Spain, Switzerland, United Kingdom, and United States.

Apple supports paid downloads for third party App Store developers in 90 countries around the world. Globally, Apple has an installed base that's at least four times larger than Android, thanks in part to iPod touch and iPad users. Even in the US, where three of the top four mobile carriers can't carry the iPhone, Apple's smartphone still has an installed base twice the size of Android, even before counting other iOS devices.

That adds up to a commercially attractive installed base of buyers that is far more alluring to developers than the hobbyist-oriented Android Market, where more apps are distributed for free and supported by ads than any other mobile platform, according to Distimo.

Apple's App Store features the least expensive apps on average across its top 100 apps than another other platform, but also features a high average price in its top grossing applications, demonstrating both a viable market for low priced volume apps as well as specialty apps that can command a higher price.

In addition to its limited reach globally, Google's Android Market has also come under assault from top Android developers for allowing widespread copyright infringement, sloppy policies regarding app approval, poor security for users' data, and allowing developers to collect inappropriate information from users without their consent.

The jailbreak threat to Apple's App Store

Because of the huge volume of real app sales in iTunes, Apple can attract the attention of developers well beyond its core Mac platform. Other vendors are working hard to copy Apple's success, but the company is also threatened by efforts to expand jailbreaking.

A recent exploit in Apple's PDF rendering software that allows a web-based crack of the iPhone's security system threatens to expose a large number of users to the ease of app piracy.

If the company does not act to better secure its iOS, it may lose its early lead in offering a viable market for developers and end up with the same listings of rarely updated, low quality hobbyist mobile software that makes up the majority of competing mobile software markets.