It's getting harder to make a dent in the mobile app market, especially for Apple and Google. While it's easy to point to the billions being paid to app developers, the reality is that Apple's and Google's 30% cut on such revenue is a rounding error. Given Apple's struggle to fend off Google, and the comparative peanuts it makes on mobile app sales, it may be time for Apple to give even more revenue back to developers to encourage a continued "iOS-first" policy.

Apple CEO Tim Cook crowed at an investor conference earlier this year that Apple had paid $8 billion to developers since the App Store's launch. While this may sound impressive, that equates to around $3.4 billion to Apple over five years, or about $170 million per quarter.

Sound like a lot? It's not. 

The $170 Million Rounding Error

After all, just last quarter Apple notched $54.4 billion in revenues, nearly $31 billion coming from sales of the iPhone alone. $170 million in mobile app sales? Apple makes 3X that amount in the first day of a quarter.

Not that app sales are immaterial to Apple's business. On the contrary, apps make Apple's hardware more appealing. As beautiful as Apple's devices are, few would bother to buy them if they didn't come with a massive app ecosystem.

So apps matter to Apple. It's just the app revenue that really doesn't matter. Not even with the overall mobile app market blossoming to $25 billion in 2013, according to ABI Research. That's not where the real money is.

The Mobile App Economy

At least, not for Apple. But developers? They could use that money.

Even as app sales boom, generating revenue from mobile apps is something of a bust for developers, and it's getting worse. According to a VisionMobile report, 35% of mobile app developers "live below the app poverty line," in that they don't make enough money from app development to sustain themselves. Furthermore, research firm research2guidance recently released data indicating a 27% drop in average revenues per paid app, from $26,720 in 2011 to $19,560 in 2012.

That drop in top-line revenue is already hard to swallow, but becomes even more so for iOS developers, given how pricey they are to create relative to other platforms:

Hey, Apple, Can You Spare A Dime?

As such, and given Android's continued market share domination, it may be time for Apple to further encourage developers to stick with it by dropping its App Store cut. While dropping its share from 30% to 20%, 10%, or 0% won't hurt Apple's revenue profile, it could go a long way toward keeping developers' pockets full.

Of course, Google could (and likely would) simply follow suit. After all, Google, like Apple, doesn't rely on app revenue, instead monetizing mobile through advertising.  

But by moving first, Apple would not only generate goodwill, but it would reinforce developers' preference for iOS, as a recent Appcelerator and IDC survey shows:

Apple, in other words, doesn't need to win over developers, so much as it needs to give developers a bit more incentive to keep it top platform for them. As volumes start to shrink relative to Android, letting developers keep a bigger chunk of their App Store haul could go a long way toward encouraging developer loyalty.

You can be forgiven for writing off Microsoft's mobile future. Given that Apple's operating income for its iPhone and iPad devices nearly surpasses Microsoft's total revenue, or that Google's Android market share makes Windows Mobile's share look like a rounding error, it's easy to disregard Microsoft's chances in mobile. That is, unless you're a CIO. Within the enterprise, CIOs continue to rate Microsoft above all other vendors, giving Microsoft some breathing room.

The question is, how much?

The CIO's Pick

Microsoft's Windows Mobile doesn't show up in IDC's latest numbers.  While IDC declares that Windows Phone/Windows Mobile made "market-beating" progress in the fourth quarter of 2012, with sales of Windows-based smartphones up 400% year over year, Android and iOS still combined to claim 87% of the 722 million smartphones shipped globally in 2012. Microsoft's share? Just 3%, according to Gartner.

Yet in Piper Jaffray's quarterly CIO Survey released last week, a full 45% of CIOs picked Microsoft as their most indispensable "mega-vendor." This may not sound like much, but the second-place vendor, Oracle, got half as many CIO votes. The next few vendors include SAP, Cisco, IBM, EMC, Hewlett-Packard and Apple, which got a mere 4%. The reports authors note:

CIOs state that 'there are really no alternatives to Microsoft. [Others said] 'MS services are getting better and will allow us to move more to the cloud,' and 'we are highly invested in their technologies and dependent on them extending their platforms.'

We believe Microsoft's dominance in the enterprise is underappreciated, and some of the threats against Microsoft, such as alternatives to the Windows desktop OS in the enterprise or productivity software, may be over-hyped in the near term. That said, keep in mind that our CIO survey does not address the large consumer business for Microsoft, which faces much more intense competitive pressures than its enterprise business.

In other words, whatever CIOs may want to buy, their employees are purchasing iOS and Android devices in droves. 

Even so, developer interest in the Windows platform may yet save Microsoft.

Sexiest Nun In The Mega-Vendor Convent

Despite its stumbles in mobile, developers continue to hold out hope. At least, developers of a certain age and vocation. According to a new Evans Data developer survey, Microsoft was picked as having "top relevance" among two-thirds of the 450 surveyed, and claimed the top spot among 90% of developers aged 46-50. Google came in second, and was listed as the mobile company set to dominate within three years. Apple? It came in fifth.

Yes, fifth.

Which, frankly, hardly seems credible. Commenting on the results, Creative Strategies analyst Tim Bajarin suggests:

I’m not surprised Microsoft is big with an older generation of developers, but what does that tell you? They’re sticking with a platform they’re comfortable with and hoping Microsoft hits it big. I’d be surprised if any of these developers who say they’re big on Microsoft or Android are not also supporting Apple. They have to be if they want to make any money.

Such results start to make sense if we separate developer interest from enterprise imperatives. According to Appcelerator's quarterly mobile developer survey, iOS and Android interest dwarfs that of Windows:

Source: Appcelerator, 2013

But among the enterprise mega-vendors, the few companies that control the vast majority of enterprise IT budgets, Microsoft tops the field as showing the most leadership in mobile among these same survey respondents:

Source: Appcelerator, 2013

This may not seem like a big deal ("Sexiest nun in the convent"), but given that 73% of enterprises have developed and deployed fewer than five applications, the mobile enterprise is still wide open. Keeping in mind Microsoft's clout with CIOs, even Microsoft's anemic 28% "leadership" rating could be enough to pave its way to significant traction within the enterprise.

Redmond's Fighting Chance

All that said, the bring-your-own-device (BYOD) phenomenon has largely rendered CIO edicts as to device preferences futile. IT has become an order-taker, rather than an order-giver, with regard to mobile devices. Microsoft may be cool with the suits, but it has yet to demonstrate that it can turn the heads of mobile developers.

Even so, it's too soon to count out Microsoft's mobile hopes. Not while it retains such fealty from enterprise CIOs and developers. With Microsoft CFO Peter Klein suggesting that Microsoft is closing in on "write once, run anywhere" cross-platform capability for Windows 8 to run across a wide array of form factors, which would allow the enterprise to have its cake (Windows desktop development) and eat it, too (Windows mobile devices), Microsoft's enterprise value proposition may be too tempting to ignore.