As the smartphone market has begun to saturate the U.S. and European markets, a virtual gold rush has taken place for mobile software. Both Apple's App Store and Google's Play Store are now populated with hundreds of thousands of games and other apps. For now there even appears to be enough "gold" to go around. Mobile app store revenues are predicted to reach $27 billion by the end of this year, and new data shows that smartphone owners are now spending time in apps than talking on their devices.
Market research firm Gartner today predicted that total mobile app downloads for 2013 will reach over 102 billion by the end of the year. This is a significant rise from 2012's estimated 64 billion app downloads. Gartner's own data shows app revenue reaching $26 billion this year, though it estimates 91% of mobile app downloads this year will have been free.
"Free apps currently account for about 60 percent and 80 percent of the total available apps in Apple's App Store and Google Play, respectively," said Brian Blau, a research director at Gartner. "iOS and Android app stores combined are forecast to account for 90 percent of global downloads in 2017. These app stores are still increasingly active due to richer ecosystems and large and very active developer communities. However, we expect average monthly downloads per iOS device to decline from 4.9 in 2013 to 3.9 in 2017, while average monthly downloads per Android device will decline from 6.2 in 2013 to 5.8 in 2017. This relates back to the overall trend of users using the same apps more often rather than downloading new ones."
Looking into the future, Gartner predicts mobile app downloads to reach 138 billion by the end of next year, and more than 268 billion in 2017. It also predicts that the trend of free downloads will continue, with over 94% of apps downloaded in 2017 being free. The firm sees in-app purchases (IAP) as being a significant source of mobile revenue in the years to come.
"We see that users are not put off by the fact that they have already paid for an app, and are willing to spend more if they are happy with the experience, said Blau. "As a result, we believe that IAP is a promising and sustainable monetization method because it encourages performance-based purchasing; that is, users only pay when they are happy with the experience, and developers have to work hard to earn the revenue through good design and performance."
(Image courtesy Cristiana Betta)