IronSource, an Israeli tech startup valued at $US1.5 billion, is believed to be preparing for an IPO in 2015.
The interesting thing about IronSource is that about 90% of the company’s mobile revenues come from Android, CEO Tomer Bar-Zeev tells Business Insider, and the company develops for Android first. For most companies, it’s the other way around: Products are developed for Apple’s iOS system first, with Android coming second.
So this could be a rare example of an IPO being staged on a business model that puts Android first. Going “Android first” appears to be a small trend, particularly in Eastern Europe and Asia, where Apple’s share of the market is smaller. Facebook, for instance, is seeing a lot of Russian developers create for Android first.
Bar-Zeev tells us that because of the specific market his company caters to, IronSource developed products for Android for about a year and a quarter before it created iOS versions. “We actually launched our iOS solution based on our experience in Android,” he says.
An Android-first IPO could be controversial in the Apple development community. Some of them get quite angry at the idea that app and software companies might want to develop products for Android first, or at least at the same time as iOS. For instance, Marco Arment, one of the earliest employees of Tumblr and a prominent app developer in his own right, says he has only met one iOS developer who has switched to Android-first, and that therefore the trend does not exist. Mac World, perhaps inevitably, says “stop trying to pass off your stilted Android fan fiction as reality.”
It remains the case that iOS is more lucrative for sales than Android is, according to data crunched by Benedict Evans, of Andreessen Horowitz. This is why, historically, apps have appeared first on iPhone and only later on iOS. But Android has over the years eaten away at Apple’s share of the market and now accounts for 83% of all smartphones sold globally, according to Gartner.
That is likely to swing a few percentage points back in Apple’s favour as sales of iPhone 6 enter the numbers in Q4. (Sales of Samsung’s competing devices have declined as a result of iPhone 6.) But iPhone 6 is expensive, and all the major smartphone growth is in China and India where consumers are poorer — So Android is going to maintain its global dominance for years to come. Here’s what that market share looks like now, per Gartner:
Market share of smartphone sales in units for Q3 2014:
- Android: 83.1%
- Apple iOS: 12.7%
Research from BI Intelligence suggests that revenue growth in Android is faster than iOS, as the platform improves and because there are simply more customers on it.
This isn’t IronSource’s fight specifically, of course. But it shows that tech companies can innovate and grow even when one company — Apple, in this case — appears to have locked in an eco-system around it.
IronSource’s mobile revenues are a reflection of Android’s market share but the Tel Aviv-based company is moving more into iOS as time goes by, Bar-Zeev says. He expects his mobile revenues to look more like 70-30 in favour of Android by the end of 2015. (And Apple fans will be pleased to know that he prefers his iPhone 6 to his Android phone — he carries both.)
The company owns a range of adtech businesses that it has bolted on to its historic core, which was providing reliable “downloader” software — the software you use to download the software you actually want. Downloader software is a lucrative business to be in because all the companies that produce software want their products to land seamlessly on users’ devices. They want the data generated by that too, and if they can cross-promote other products than that is even better.
This core downloader business is now the underpinning of a larger software “discovery” platform and a set of ad networks. IronSource recently acqui-hired Chris Cunningham, who until late 2013 was the CEO of AppsSavvy, a mobile app ad network. He is now IronSource’s CMO. IronSource also has a legacy desktop-web based business.
A source (not Bar-Zeev) tells Business Insider that IronSource’s gross revenue run-rate is approaching $US350 million annually. The company recently took a $US90 million investment funding round. If it files for an IPO, that will likely occur in New York.
Bar-Zeev declined to confirm that an IPO was in the works, but he didn’t deny it either. “Many Israeli companies are trying to create big, substantial businesses and going public is a step on that roadmap.”
Regardless, Android will continue to play a large role in IronSource’s future. The company’s products allow customers to promote products across devices, and this is more easily done on Android, Bar-Zeev says. And as Android is more dominant in China and India, a large part of IronSource’s business will be there. “I’m flying there [China] tomorrow,” Bar-Zeev says. “We consider China and India the most important expansion opportunity.”
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