2015 Top Trends in App Investing

App investing is sometimes difficult to get a handle on because the market changes so quickly and dynamically. However, it is possible to organize its dramatic turns into a coherent pattern. Understanding the general direction of the market helps individuals interested in app investing anticipate the inevitable ups and downs, and twists and turns characterizing this exciting industry. Here, we outline the major trends which are shaping the global mobile app market in 2015.

Google Play vs iOS

Google Play and the iOS App store are both winning increasingly competitive positions over the other, which is good news for those interested in app investing. Google Play leads the market in total downloads, while the iOS App Store leads in total revenue.
Google Play’s worldwide downloads are a whopping 70% higher than the iOS App Store. App Annie’s Q1 report identifies Google Play’s strong presence in emerging markets with first time smartphone buyers as the reason for this advantage. Meanwhile, the iOS App Store exhibits a 70% lead over Google Play in terms of revenue this quarter, earning much of its revenue from the major markets of America, Japan, and China.
It seems like this division will only become more obvious as the year progresses, as Google Play and the iOS App Store make respective headway in the emerging, and established markets.

Growing demand for iOS apps in China

According to the iOS App Store’s first quarter report, China and the United States have swapped rankings for the country with the most downloads. China, already a major consumer of mobile applications, lagged behind the U.S. in 2014. Now, it has overtaken America to become the iOS App Store’s top downloader. Japan, the United Kingdom, and Russia round out this list, ranking number three, four, and five respectively.
The App Annie Index Q1 2015 report speculates that the increase in the Chinese market for iOS apps stems from last year’s launch of the iPhone 6 and 6 plus. Asian consumers have a marked preference for larger screens (phones with interfaces of 5 to 7 inches make up 60% of smartphone shipments to China), and Apple’s new iPhone launch appealed to this demand.
The majority of apps downloaded in China were Games and Photos and Video apps. In particular, the photo app Pitu (released by Shanghai-based Tencent Technology) became a major hit, surging to number one in the App store in areas including Mainland China, Hong Kong, and Taiwan.
The growing demand for iOS apps in China was reflected by an increase in app revenues. However, this increase wasn’t enough to displace America and Japan from their status as top countries for iOS App Store revenue. These rankings remained the same as the fourth quarter last year, with America, Japan, China, the United Kingdom, and Australia making the top five.

Mexico breaks into the top five for Google Play

Google Play has an increasingly strong presence in emerging markets, including Mexico. App Annie reports that this quarter, Mexico surpassed South Korea to break into the top five countries for downloads on Google Play. These downloads were concentrated in the Games and Tools categories, making them promising categories for app investing.
Mexico’s stronghold for Google Play is expected to continue growing in future years. In 2014, less than a quarter (or 29 million) of the population had a smartphone. This is expected to change rapidly, with the number of smartphone owners climbing to 50 million. In light of this anticipated increase, it appears that Google Play is smart to cultivate these emerging markets, where growth is still abundant and incredibly optimistic.

Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.