40 Android Business Models, Part One

moneyOne challenge with any new platform is figuring out how to make money from it. While some people are working with Android “for the love of the game”, others would like to build a business or augment an existing business.

One of the complaints about Android vis a vis iPhone is the apparent lack of developers making money. Some of that can be attributed to relative market sizes. But, more importantly, those complaining are focusing exclusively on just one business model: build the app, sell the app to individuals.

There are many other ways to go about the problem. In fact, selling apps to individuals is pretty close to dead last in the models I would choose (and have chosen).

So, with that in mind, here are the first six entries of a brainstormed list of 40 different business models for making money off of the Android platform:

Model #1: Build the App, Sell the App to Individuals

This is the quintessential mobile revenue model, since the dawn of handheld computing. By listing your app in the Android Market with a price tag, you are counting on X% of the users visiting the catalog, Y% of those finding your app, and Z% of those buying your app (and not requesting a refund within 24 hours). Given a big enough number of devices in use, you can sell some copies, despite the fact that neither X% nor Y% nor Z% are anywhere near 100%. You can also take your own steps to improve your percentages (e.g., marketing, to increase Y% and Z%) and sell through altermative markets (each small, but with their own X%, Y%, and Z% that may be more favorable).

Model #2: Make the App, Sell the App to Enterprises

Consumers are not the only market for software, though.

Enterprises purchase a ton of software, some even for mobile devices. Making apps that would appeal to enterprises — who tend to buy large numbers of licenses — gives you an entirely different sales process and revenue model. Now, you are making thousands of dollars per sale, not pennies, and you are using marketing to get sales calls, not individuals making purchases.

Not every app is something the enterprise will want, you still need the sales expertise, and there is no sign that Android is a major player in mobile devices (the way Blackberry is, for example). But, it is an alternative to trying to convince some percentage of millions of people to part with $1 apiece.

Model #3: Make the App, Sell the App to Schools or Universities

Enterprises are not the only ones who buy in bulk quantities. Educational institutions, notably colleges and universities, tend to buy a lot as well. Some device manufacturers are going to pitch their devices through schools — creating software of interest to students (or perhaps school administrators) and partnering with those device manufacturers gives you another way to get your wares in front of interested people. You can still sell through the Android Market, of course, but by finding or creating other channels, you gain access to markets with perhaps fewer directly obvious competitors.

Model #4: Make the App, Sell the App to OEMs

Of course, the dream of many app developers is to skip selling one copy apiece to a million people and instead sell a million copies once to a device manufacturer or OEM. With this model, selling to individuals is not an end, but a means of demonstrating consumer interest. Couple that with a well-designed app strategy, one where OEMs can gain a competitive advantage by putting your app in their firmware, and you have a chance at a “big score”.

Of course, only a handful of third-party applications make it onto devices, and these tend to be ones with crazy-good user value (e.g., Microsoft Office file viewers/editors). It also helps if you have connections with device manufacturers, either directly or through advisers or similar indirect means.

Model #5: Make the App, Sell the App to Content Providers

Not everybody who wants to get on mobile devices is in position to create their own apps. If you can find a repeatable pattern (say, WordPress sites), you could create a “template” app that covers much of the functionality, then tailor it on a one-off basis for specific content providers. You then license the customized app to the content provider, that they can distribute through their site, or the Android Market, or wherever. The content provider gets visibility on Android devices for less time and money than it would take for them to create the app themselves. You get to leverage your investment in the template across multiple sales, each far more lucrative than selling to individuals.

The challenge is in finding a repeatable market segment, which you are familiar with, for which you can create such a template app. And, of course, sales and marketing cannot be ignored, either.

Model #6: Make the App, Sell the App to Service Providers

Some apps are tailor-made for the same strategy as Model #5, but targeting service providers rather than content providers. A great example would be a SIP client. SIP is generally interoperable, but it frequently requires lots of finicky settings that are provider-specific. Rather than (or in addition to) creating a SIP client to sell to end users, make it brandable for a SIP provider, plus have the means of “baking in” various provider-specific settings at the same time. You license the tailored app to the SIP provider, who in turn distributes it to their customers (probably for free, banking on more SIP minutes sold). Once again, you can leverage a single app into multiple significant sales, rather than having to only deal with end users.

Tomorrow, we will begin looking at models where you give the app away for free to individuals, and make money from some of them in other ways — the so-called “freemium” approach.

Mark Murphy is the founder of CommonsWare and is the author of The Busy Coder’s Guide to Android Development, The Busy Coder’s Guide to Advanced Android Development, and Android Programming Tutorials.

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Founded on November 5, 2007, we've enjoyed bringing you the latest in Android news and rumors. Updated daily, we strive to deliver reviews, opinions, and updates on all things related to Android.

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  1. Jbeer
    September 14, 14:23 Reply

    Great article!

    About the impact of Android in "Enterprise market". Do you think that it is capable of been the same level as a Blackberry, for example? What does it needs? More time to create confidence between enterprises? Be more mature?

  2. commonsguy
    September 14, 14:30 Reply

    I think Android has great potential for the enterprise market…operative word there being "potential". Enterprises and malware authors have a remarkable number of shared interests (e.g., both want to control what users access, both want to log and report what users access, both want to be able to shut down the phone). Android is focused on keeping the malware away from consumers, but that will cause some difficulty for firms looking to help enterprises tailor their devices the way they want.

    On the plus side, I have heard some promising statements regarding adding enterprise-y hooks to Android. Hence, I remain hopeful.

  3. Acsteffy87
    September 14, 11:31 Reply

    the main problem is that they keep making free app versions alongside their paid versions. Of course im going to download the free one and save a few bucks. Stop making free versions of your app and you may net a few more bucks!

  4. commonsguy
    September 14, 15:43 Reply

    @Acsteffy87: Actually, there are many models for making money while giving the app away for free — those will be in Tuesday's and Wednesday's posts in this series.

  5. pjv
    September 14, 18:40 Reply

    How about #41?: Make an open source app, and put it on the market for free

  6. commonsguy
    September 14, 19:30 Reply

    @pjv: Open source does not mean there are no revenue models. Tomorrow and Wednesday's posts will cover models where the app is free (possibly even open source) and revenue is earned from the app users in other ways.

  7. dave
    September 15, 11:30 Reply

    One of the things holding Android back in the Enterprise/Business arena, at least as far as a comparison to Blackberries (which is not the entire picture but it is what is referenced in the article) is the apparent by Google to allow full MS EAS support. I’ve heard the arguments but you will not convince companies to switch from Outlook to Gmail just so they can roll out Android phones. Maybe the Cliq will the spear head for a “Google Experience” with EAS, hard to tell from the summary level specs. And no, the suppport for email only in the MyTouch is not full EAS support, I do understand the difference between only having push email ala MyT3G and full EAS synchronization.

  8. NitroDesk
    September 15, 16:20 Reply

    While google itself may or may not implement EAS in Android, there are alternatives which fill the gap (Touchdown : [http://www.nitrodesk.com being one such example) and make it their full time job to address and improve that. Of course there are those who believe that for any software or solution to be legitimate it has to come free with the phone or it has to come from Google or HTC or the carrier. Unfortunately that perception is something that may not change very easily.

    And of course there are some lessons we ourselves learned from selling touchdown and earning a living from it : http://nitrodesk.blogspot.com/2009/09/earning-liv

    (disclaimer: yes, i work for NitroDesk)

  9. CoreDroid
    January 28, 01:09 Reply

    so according to the author, one day our lives will be very dependent with android
    This android technology could produce a super technology, but environmentally friendly?

  10. Marc Austin
    February 02, 19:42 Reply

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  11. homemade beer guy
    July 07, 10:21 Reply

    Very nice. Do anyone know when Evo will be getting flash or skype? I will traveling to Italy this fall and would like to have at least skype by then.

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    July 27, 02:59 Reply

    Wow. My intention was not to beat anyone over the head with anything, and in fact I agreed with the post in general. Nice post

  13. Charming Chick
    October 22, 08:12 Reply

    It is an encouraging information for the enterprising world to learn about this 40 Android Business Models, Part One. thanks for the nice information.

  14. Shony
    January 04, 05:54 Reply

    @pjv: Open source does not mean there are no revenue models. Tomorrow and Wednesday’s posts will cover models where the app is free (possibly even open source) and revenue is earned from the app users in other ways.

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    May 11, 08:21 Reply

    I will traveling to Italy this fall and would like to have at least skype by then.

  16. Pharm
    March 28, 03:33 Reply

    Cool! Change your life today. Don’t gamble on the future, act now, without delay.

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