Smartphone Apps a Potential $30 Billion Industry
Mobile phone users have an insatiable appetite for downloading applications to make their smartphones smarter.
Satisfying that appetite rang the cash register to the tune of $4.2 billion in 2009 and that figure will increase to 6.2 billion for 2010, predict analysts at Gartner.
The technology research firm predicts that 80 percent of the mobile applications, or apps, downloaded in 2010 will be free and that advertising revenue from them will rake in about $600 million.
By 2013, Gartner said, mobile users will download more than 21 billion mobile apps, worth more than $30 billion from online stores such as Apple’s App Store, Google’s Android Marketplace, Blackberry’s App World, the Palm Software Store, and Windows Mobile Apps.
By then, free ad-sponsored mobile apps will generate almost 25 percent of mobile store revenues, up from 5 percent of revenues in 2009, said Carolina Milanesi, Gartner research director of mobile devices.
Currently, games are by far the most popular downloads, but other types of applications are gaining traction with the smartphone set.
“When looking at applications, [games] remain the most popular programs. However, mobile shopping, social networking, utilities and productivity tools are growing in popularity too and attracting increasing amounts of money,” Milanesi told TechNewsDaily.
Free apps rule
Eighty percent of the 4.5 billion apps downloaded in 2009 were advertising-supported and free. That trend will only continue, Gartner said. By 2013, about 9 out of every 10 apps downloaded will be free. When users do crack open their wallets for an app, 99 cents will by far the most common price, followed by $1.99, $9.99 and $14.99, according to the prognostications.
Why would a developer offer a free app? Because a developer can sell advertising or charge for things within the application such as music downloads or delivery charges on items the user orders through the application.
The increase in smartphone sales is a key driver of consumers' application addiction, Milanesi said. There is also an increased need to differentiate devices from the software side as hardware becomes commoditized and features become standard across all devices. Users want to personalize their devices and download apps that will help them keep their smartphones current and relevant.
The availability and range of applications available for a device may become a deciding factor in the mobile wars.
“Application stores will be a core focus throughout 2010 for the mobile industry,” Milanesi wrote in the Gartner report, “and applications themselves will help determine the winner among mobile devices platforms. Consumers will have a wide choice of stores and will seek the ones that make it easy for them to discover applications they are interested in and make it easy for them when they have to. Developers will have to consider carefully not only which platform to support but also which store to promote their applications in.”
Because of the critical competitive role apps will have on a mobile phone's success, developers will be forced to create innovative apps. Users can expect to see apps being offered that take advantage of increasingly sophisticated mobile devices that incorporate features such as GPS navigation. “We will see applications being much more integrated with location, contacts and services increasing the level of contextuality,” said Milanesi.