Microsoft is Paying Attention to App Revenue Stream

When it comes to monetization, Microsoft MSFT might have a trick up its sleeve. And that trick just might be apps. Seeking Alpha’s Adrian McCarroll suggested it and others have seconded the notion.

Microsoft has a habit of showing up late to the party. Such was the case with tablets and smartphones, something the company tried to solve with the Windows 8 tablet and the recent $7.2 billion buyout of Nokia NOK’s phone division. Soon, Windows 8.1 will premiere, showing just how serious Microsoft is about competing.

Which brings the subject of apps to the table. As McCarroll pointed out, Google GOOG and Apple AAPL saw the writing on the Internet wall and opened app stores early on. Now Microsoft has joined in with its Windows 8 and Windows Phone app stores respectively and even opened an app store on Xbox One.

According to Forbes, Apple collected $9 billion in app revenue in 2012 and that number could grow to $22 billion by 2016. Meanwhile, ABI Research reported that Android mobile app revenue in 2013 would come in at $6.8 billion.

No wonder Microsoft has started paying attention to app revenue!

The question is: Will it work? According to NDTV Gadgets, the Windows Phone Store announced that transactions on its Windows Phone platform were more than 9 million per day recently. Since this figure includes app and in-app purchases, the initial results are encouraging.

What’s more, the number of transactions is growing. The recent number, suggesting 270 million transactions a month, represents an increase of 70 million transactions since Microsoft last reported transaction numbers in June.

Microsoft has been encouraging developers to publish new apps and update old ones in advance of the upcoming holiday season to help boost these numbers even more.

In addition, NDTV Gadgets reported that Microsoft said it would start paying developers after 30 days of transactions instead of after 120 days, as has been the case in the past. This was due, in part, to the fact that Microsoft waited for proceeds from various carriers to come to them, something the company says it will no longer do.

None of this is to say the road ahead will be easy. Microsoft will have to continue to find ways to encourage the development of apps for its products. The Next Web reported that Android and iOS control more than 90 percent of the smartphone market, with Microsoft a distant third.

For the time being, this means many popular apps aren’t even available on Windows Phone. This will have to change in order for Microsoft app revenue to become a significant factor.

At the time of this writing, Jim Probasco had no position in any mentioned securities.