MAU for Apple

In the postmodern world of computer technology in which we live, success is not measured by income or profit, not by the number of units sold, but by the number of users that a company's ecosystem can attract. To do this, now, as a rule, apply the indicator of the number of monthly active users (Monthly Active User - MAU).

I will give a few examples:

• According to Facebook, the MAU figure for their messenger is 200 million.
• The number of monthly active WhatsApp users is 500 million, of which 48 million live in India.
• According to the company, last month [the original article is dated April 2014 - approx. trans. ] Line users rate (both active and inactive) was 400 million.
• WeChat has 355 million monthly active users.
• Viber is actively used by 105 million users every month.

Startups summarize all these millions of active monthly users to get an estimate of the value of a company to attract investment [1]. The faster the growth rate of MAU, the “more successful” the company is considered.
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When companies are acquired, it is common to divide their business value by the MAU indicator in order to get an idea of ​​"how much each user is worth." They do this because the company has no revenues that could be measured - instead, they take the MAU indicator. However, the process during which the MAU indicator turns into income dollars, to put it mildly, is indirect.

For the majority (or, perhaps, for all?), It is still unclear how this happens, especially since not all monthly active users are equal to each other, and their loyalty is very changeable. If we took into account all the planned revenues from each active monthly user, then most likely we would get an absurd result. In fact, at the moment, the companies listed above do not receive any income directly from their services.

Despite the violation of the unspoken contract, some companies manage to profit from their users. Among these companies, for example, are Apple and Amazon. According to Apple, in the last quarter the number of iTunes accounts reached 800 million [2]. They cannot be considered active monthly users, since their activity has not been tracked, but we have an idea of ​​how much is spent on iTunes and other services. In addition, Amazon cites a figure of 244 million monthly active users, considering only those accounts from which purchases have been made over the past twelve months.

This allows us in the process of conducting a study to compare Apple and Amazon with respect to the number of accounts, revenues from one account, even the profitability of each account.

All this is shown in the graphs below. First, the total number of accounts:



Note that I added trend lines to both graphs and their formulas.

The graphs below show revenue figures from each account for iTunes (which further fall into revenue from each segment of iTunes) and for Amazon. Note that the scale on the ordinate is different.



Such a review demonstrates how the economic value of users may differ. In the case of Apple, the company is increasing its user base (literally) exponentially. The revenue from each user, for obvious reasons, decreases. This is due to the fact that new / recent users do not spend as much as old ones. Perhaps in the later stages of use, the income from each consumer is somewhat more stable. Another interesting point about iTunes data is how music has given way to applications and services in various revenue items. This shows how users can move between different sources of revenue in the long run.

As for Amazon, here the company is increasing its contingent of its basic users linearly (note the alignment). Revenue per user is still very stable.

If you do not go into details, it may seem logical that the rate of growth in the number of users has an effect on the quality of these users. This relationship should lead to further reflections on the quality of the hundreds of millions of users attracted over several months.

The growing number of Apple users is a function of expanding the company's device portfolio and their distribution. Apple has already demonstrated that there is a limit to this type of growth. The level of sales of devices on the iOS platform has reached 830 million or so in seven years. And this is an amazing achievement. You can forgive them for not having succeeded in crossing the threshold of a few more billions, because they managed to get income not from the number of units sold, but due to the quality of the hardware and service / content, unlike most of those who sold more units for a shorter time, but with whom the indicator of the level of revenue from each user remains significantly lower.

The growth in the number of Amazon users is a function of the expansion of the logistics and merchandising complex. This is also not easy at the global level. It must be assumed that Amazon simply cannot expand exponentially, like Apple or other MAU aggregators, because it has to depend on trucks, roads and rules in order to carry out most of its business deals.

In conclusion, I will assume that there are no “right” or “wrong” business models for forming the basic contingent of consumers. Both Apple and Amazon do business successfully, forming their user base and building trust that will serve them well in the future. However, although there is no right or wrong revenue structure per user, it seems to me that such a structure should exist. In most cases, this remains a matter of devotion, not objective reasons.

[1] - it is believed that with a MAU of 10 million users, financing is difficult to obtain.

[2] - For some unknown reason, Apple adds that most of them are credit card holders.