It may come as no surprise that more people download applications on the iPhone and iPod touch than on Google's Android phone, but on both services, people are making purchases based on services they've already tried for free.

Mobile ad network AdMob released its July survey results today. After surveying 1,117 mobile phone users, the company found that across platforms, free-to-paid upgrades are the most cited driver for mobile app purchases, helping to prove that the freemium model works. In mobile at least.

The iPhone, represents 60% of the U.S. smartphone market, and it has by far the stickiest retail presence in mobile.  

AdMob found that 40 to 50% of iPod Touch and iPhone users download apps, compared to 19% of Android users. Extrapolating from AdMob's data, GigaOm's Om Malik estimates that the iPhone App Store is now bringing in $2.4 billion a year.

And what does that mean for developers? Free, ad supported apps often translate into paid downloads.

Writes Malik:

"People are happy spending money on apps for their smartphones, especially after they’ve had a chance to try them for free."

This is true for the iPhone's smooth interface, but it also applies to Android (and likely other platforms). Writes AdMob: "Users who purchase paid apps on either platform exhibit similar downloading and spending habits, indicating the potential for paid apps on Android Market as it develops.”

Each month, Android and iPhone users download approximately eight free apps a month. iPod Touch owners download an twice as many free apps a month. Spending on the Android averages about $8.63 a month for apps, while users spend about $9.49 a month on the iPhone and $9.69 on the iPod Touch. But across platforms, users said they are most likely to download a paid app if they liked the free version: 54% of users surveyed on the iPhone, 52% of Android users and 72% of iPod Touch owners. 

Meghan Keane

Published 27 August, 2009 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

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