Dominant U.S. App Store may be surpassed by China in 2012

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Apple's U.S. App Store sales handily beat revenue generated from the Android Market in 2011, while strong Chinese growth gave the already immense numbers a shot in the arm and may surpass U.S. downloads in 2012.

According to a new study released by market research firm Distimo, Apple's U.S. App Store for iOS devices remains the top marketplace for mobile downloads, and has received a healthy boost in revenue as its Chinese counterpart continues to grow.

Despite the proliferation of handsets running Google's Android OS, which now accounts for 53 percent of the mobile smartphone market, revenue generated by the platform's app sales was eclipsed by Apple's App Store.

Sales of iPad-specific apps alone doubled that of the entire Android Market, while revenue from apps tailored for the iPhone, which has a 29 percent share of the smart device market, was even larger and generated nearly four times the revenue of Google's rival marketplace in the U.S.

Over the course of 2011, Apple's iPhone app sales saw a steady decline month-to month, though Distimo blames the lull on the later than usual release of the iPhone 4S. The lowest point of the year occurred in September when anticipation for the 4S was highest, and was followed by a spike upon the handset's debut. Peak revenue for the U.S. App Store came a little over a month after the newest version of Apple's smartphone was released.

The same "anticipation effect" was seen in app sales for the iPad, as downloads declined in January and February only to pick up steam after the iPad 2 was released in March.

Apple's domestic App Store is no longer the only outlet showing strong figures, however, as China saw a sharp increase in downloads through 2011 and may surpass the U.S. App Store in 2012.

In January, the Chinese iPhone App Store only accounted for 18 percent of combined U.S. and China downloads, but by November that number rose to 30 percent. China's share of iPad app sales showed more potential, with the two countries being nearly equal in terms of downloads for the tablet.

China App share
Source: Distimo

Despite the number of apps downloaded, China still trails the U.S. in terms of generated revenue. This might change in 2012, however, as Apple recently introduced the option for Chinese customers to buy apps with local currency rather than by credit card.

A late November Distimo blog post reported that the App Store's acceptance of the Yuan has the potential to increase profits, noting the number of paid apps purchased nearly doubled in the two weeks following the change.

Chinese developers can now leverage the Yuan when creating "freemium" software with in-app purchases (IAP). The general trend of IAP-supported apps is on the rise, growing from 29 percent of the 200 highest-grossing apps to peak of 53 percent in September. The model saw a slight decline in October to November and now sits at slightly less than half of all revenue with 48 percent.

China has been seen as Apple's greatest emerging market opportunity, with sales reaching $4.5 billion last quarter. The iPhone 4S is expected to be released in the region soon, and should meet with huge sales as Apple recently passed Nokia as China's top phone brand.


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