But a lot of the growth this market will probably see still lies more or less far ahead of us, starting in 2010, but probably seeing strong growth until 2013 or even further. The most recent attempts in predictions where the market is going come from Gartner.
Regarding App Store revenues and downloads, Gartner foresees:
- 2010: 4.5 billion apps downloaded, for a total of $6.8 billion in revenue
- 2013: 21.6 billion apps will be downloaded, for a total of $29.5 billion in revenue
- 2010: 3.7 billion (82%) free app downloads and about 800 million (18%) paid downloads
- 2013: 18.8 billion (87%) free app downloads and 2.8 billion (13%) paid app download
Just by looking at these numbers, one would think that free is the way to go. And maybe that is so. The question, then, remains where all the revenue will come from. Gartner splits its revenue predictions between end-user spending and advertising revenue as follows:
- 2010: about $6.2 (91%) billion in end-user spending and 600 million (9%) in advertising revenue
- 2013: about $23 billion (78%) in end-user spending and 6.5 (22%) billion in advertising revenue
First of all, these numbers imply that in-app advertising (as part of mobile advertising) is pretty big business. The fact that many big players in the mobile space are positioning themselves to take a piece of that market right now (Google/Abmob, Apple/Quattro and Opera/AdMarvel) further substantiates this.
It also means that for any app-developer and mobile publisher, there is a chance to create a profitable business out of advertising revenues. This will probably work better for some then for others, but, in our opinion, it is a pretty save bet that mobile advertising is here to stay.
Furthermore, although Gartner does not further go into detail about “end-user spending”, it is clear that up-sale (full versions, extra levels, virtual goods etc.) will make up a large part of end-user spending. So again, for many app-developers (especially in gaming) this may be the way to go.
And of course, for “some”, simply selling the app is an option as well.
As an opinion, a market seeing such a strong growth within just a few years will probably look completely different from what it is looking like right now. New means of increasing end-user spending will pop up, supporting industries and sectors (payments, for example) will pop-up. Furthermore App Store themselves will evolve as competition between them increases (more openness might be a consequence of this).
As a bottom line, the study (even if far off) implies something we believe is very true: apps in general are big business.
And we are glad to be part of it.