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Bargain-hunting Chinese make life tough for iOS devs

App Store generates just THREE PER CENT of global revenue

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Apple iOS developers in China are struggling to make a living from the platform, with App Store revenues in the region accounting for just three per cent of the global total, despite scooping 18 per cent of worldwide downloads.

A new report from Shanghai-based analyst Stenvall Skoeld (via TNW) claims that Apple and its developers in the People’s Republic may have hit a brick wall in the form of high piracy rates and the reluctance of Chinese consumers to pay for digital content.

So far iOS app developers are struggling to make money in China. One reason is that a large amount of iOS devices in China are ‘jailbroken’, allowing users to download apps for free from alternative ‘app stores’. Another challenge is the fact that Chinese users tend to be reluctant to pay for apps, resulting in low revenue per user.

Although Apple doesn’t release App Store revenue data, the analyst combined figures from analytics firm App Annie with Cupertino’s Q3 earnings report to estimate that just 3.1 per cent, or $37m (£23.7m) was made from the Chinese App Store in the last quarter.

The low contribution is a result of a revenue per download just over three cents in China, compared with revenues per download of 28 cents in the US and 19 cents globally.

This does not mean that App developers should give up on China. The Chinese iOS app market looks set for strong growth in the next couple of year. Using a back-of-the-envelope calculation we arrived at a scenario that sees the China App Store market growing by 98 per cent in 2012 and 88 per cent in 2013, with 2013 sales reaching $321m (£205m).

Apple certainly has a great opportunity in the People’s Republic.

Although it now sits fifth in the handset table, Q2 shipments were up 100 per cent from the previous year, and total smartphone shipments in the country jumped a massive 199 per cent over the year, according to Canalys.

However, persuading Chinese customers to spend money on apps may take a while yet. ®

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