Blog

Show Me the Money

By Tim Kridel for Digital Innovation Gazette

Android has a bigger market share than iOS, so a bigger pool of potential users should mean that Android apps drive more revenue, right? Not necessarily. For example, at the LeWeb conference earlier this year, Evernote CEO Phil Libin said that his app’s average revenue per user (ARPU) for Android is $1.06 versus $1.79 for the iPhone and $2.01 for BlackBerry. Its iPad ARPU, meanwhile, is $2.18.

Why such big differences by OS and form factor? To find out, we asked Ken Gullicksen, Evernote’s vice president of corporate development. One takeaway echoes our Q&A with FourBros Studios earlier this year regarding Windows Phone: When developers fixate on OS market shares, they risk overlooking nuances that point to revenue opportunities.

Why do Evernote’s Android users have lower ARPU?

Ken Gullicksen: There are three factors that probably account for the higher monetization we see from iPhone users versus Android users. The first is that on average our iPhone users have been using Evernote longer, and the longer you use Evernote, the more likely you are to pay. The second is that iPhone users are somewhat wealthier on average than Android users. The third is that iPhone is still a little ahead of Android in the efficiency of its payment mechanism.

Some developers and pundits look down on Windows Phone and BlackBerry because they have small market shares compared to Android and iOS. But Evernote CEO Phil Libin said that Windows Phone 7 ARPU is higher ($1.44) than Android, while BlackBerry is $2.01. Why might BlackBerry and Windows Phone have higher ARPUs than most people would expect? And shouldn’t those ARPUs be an example of how platforms with a relatively small market share can still be a viable market opportunity for developers?

K.G.: In our case, we probably see higher monetization from Windows Phone 7 and BlackBerry users because the Evernote users of those platforms are somewhat more likely to be highly engaged professionals that derive high value from the service. The promise of Evernote is that it will run on all of your favorite devices today and in the future. It is important for us to demonstrate robust multi-platform support.

How do tablet ARPUs compare to smartphone ARPUs?

K.G.: Evernote users of tablets are generally much more engaged than users of smartphones. More engaged users are more likely to upgrade to our premium service.

In many ways, tablets are the perfect devices for Evernote. Some of the core Evernote R&D team members go all the way back to work on the handwriting technology for the Apple Newton. Tablets are part of our DNA.

When Apple first disclosed it was developing the iPad, our development team walked around the office for months with mockups made from cardboard so they could imagine the user experience. When we finally got our hands on one of the first iPads, we were really proud of how nicely our cardboard software mockup looked in real life.

At the LeWeb conference, Libin said, “Our philosophy is to let people buy extras as easily as they can.” How do Android, BlackBerry, iOS and Windows Phone compare in terms of making it easy for developers to sell those extras and for users to buy them?

K.G.: Apple is still ahead in the efficiency of its payment mechanism. They make it really easy to buy. Android is getting better and better as they work with more carriers to integrate carrier billing.

Photo: Corbis Images

Tim Kridel Tim Kridel has been covering all things tech and telecom since 1998 for a variety of publications and analyst firms. Based in Columbia, Mo., he still enjoys the childhood hobby that led to a career writing about technology: ham radio. He is a frequent contributor to Digital Innovation Gazette.