App downloads to surge

12 September 2012

NEW YORK: App downloads to mobile devices should surpass the 300bn benchmark worldwide by 2016, but the vast majority of this total will still be attributable to tools that are available for free, a study has predicted.

According to Gartner, the research firm, consumers installed 24.9bn apps from App Stores in 2011, some 88.4% of which were free. In 2012, demand levels will hit 45.6bn, with 89% of apps commanding no fee.

Rather than moderate as the uptake of devices like tablets and smartphones increases, this trend will gain strength, as 91% of the nearly 131bn apps installed in 2014 are due to be available without cost.

Download numbers should top 205bn in 2015 and 310bn in 2016, when free offerings are pegged to take 92% and 93% of the market respectively. By the latter date, the sector will be worth $74bn.

Looking at the category in 2012, exactly 90% of paid-for downloads are priced at less than $3. Apps costing between 99¢ and $2.99 are set to account for 87.5% of the paid-for market in 2012 and 96% in 2016.

Apple's App Store was forecast to deliver over 21bn downloads overall in 2012, equating to 74% annual lift and more than three-quarters of all such activity, even though it only contains 25% of all apps in circulation.

Brian Blau, research director at Gartner, said: "The number of apps available is driven by an increasing number of stores ... that includes platform owners, device vendors, communication service providers and others who want to offer core mobile app services.

"These stores will see their combined share of total downloads increase, but demand for apps overall will still be dominated by Apple, Google and Microsoft."

Among the major emerging rivals to these operators will be Amazon, the ecommerce giant, and Facebook, the social network, two firms possessing "strong brands" and an international presence.

One market that may witness different trends is China, where there is a "boom" in independent Android Stores due to the absence of Google Play. Most telcos also have "weak" stores, leaving room for new entrants.

More broadly, the analysis suggested that in-app purchases would deliver 41% of App Store revenue by 2016, up from 10% in 2011. The proportion of tools boasting this functionality will rise from 5% to 30% in this period.

"App stores should support in-app purchases as soon as possible as this offers a new path of monetisation, and helps to attract developers as they attempt to extend an app's momentum by providing easy access to upgraded services and functionality," Blau said.

Data sourced from Gratner; additional content by Warc staff