Is Google too lax on Android Market app piracy?

Jason Ankenyeditor's corner

Mobile application downloads worldwide are on target to increase 144 percent in 2011, eclipsing the 18 billion mark by year's end--up from 7.4 billion a year earlier--according to a forecast issued last week by telecoms analyst Ovum. Premium mobile app download revenues are poised to reach $3.7 billion this year, Ovum adds. The future's even rosier: At the current rate of growth, downloads will exceed 45 billion by 2016, with revenues expected to top $7.7 billion.

Ovum projects total app downloads across Google's (NASDAQ:GOOG) Android platform will surpass Apple (NASDAQ:AAPL) iOS installs this year by a margin of 8.1 billion to 6 billion--consider that just a year ago, iOS app downloads nearly doubled Android downloads at 2.7 billion to 1.4 billion, respectively. Android is expected to pull even further ahead in the years to follow, with downloads slated to reach 21.8 billion by 2016, compared to 11.6 billion for iOS. "The huge lead in downloads that Android will take on Apple is being driven by the growth of the platform as a result of its increasing popularity and progress into lower price points," said Ovum devices analyst Nick Dillon in a statement. But despite the download disparity, Ovum anticipates that iOS will continue to generate the majority of paid app revenues moving forward, reaching $2.86 billion in 2016 compared to $1.5 billion on Android.

How is that possible? Google's Android Market offers more free apps than Apple's App Store, for starters--earlier this year, app marketplace analytics firm Distimo reported more than half of all Market apps are available as free downloads, compared to roughly a third of App Store offerings. A month later, Distimo issued a follow-up report indicating that 80 percent of all premium Android Market apps have been downloaded fewer than 100 times worldwide. "It is more challenging for developers in the Google Android Market than in the Apple App Store to monetize using a one-off fee monetization model," wrote Distimo data analyst Hendrik Koekkoek on the firm's blog. "We found that only two paid applications have been downloaded more than half a million times in the Google Android Market worldwide to date, while six paid applications in the Apple App Store for iPhone generate the same number of downloads within a two-month timeframe in the United States alone."

But new research from Yankee Group and location services firm Skyhook suggests that Android developer revenues are also victimized by rampant app piracy. Among Android developers surveyed, 27 percent state piracy is a huge problem, and another 26 percent view it as something of a problem--about a third say app piracy has cost them more than $10,000 in revenue, 32 percent indicate it increases their support costs and another quarter blame heavy loads imposed by pirated copies for increasing their server costs. The fault lies with Google, developers say: 53 percent of respondents believe the company is far too lax in its efforts to police Android Market.

"Android apps are living in the Wild West without a sheriff," says Yankee Group director of research Carl Howe in a statement. "With five other major mobile OSs competing for consumer dollars, Google can't afford to simply let pirates kill app developers' businesses. They need to foster some law and order or developers will flee to other platforms and Android will lose customers." Among Yankee Group's proposed solutions: Establishing a market certification program, introducing protocols to verify app payments and adding automatic code obfuscation and tamper-proofing safeguards. "The only solution is a license key policy based on accounts and/or device IDs," Android app developer SmartDyne says in the report. "But this results in higher effort for every purchased app and of course higher costs." The answer is undoubtedly complex. But the longer Google delays taking action, the worse the problem is going to get. -Jason