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Last updated on April 24, 2014 at 17:35 EDT

App Downloads Will Nearly Double In 2013, With $26 Billion In Sales

September 19, 2013
Image Credit: Thinkstock.com

Michael Harper for redOrbit.com – Your Universe Online

The introduction of Apple’s App Store in 2008 brought a new sort of mobile marketplace to consumers, one that has also become quite popular on Android, Apple’s main competitor.

Today, analyst group Gartner has released new numbers, which not only delve into the booming app business, but also show the rising popularity and pending dominance of smartphones over feature phones.

According to new data from the research firm, all app stores will see upwards of 102 billion downloads by the end of 2013, largely outpacing last year’s 64 billion downloads. All these downloads are also earning marketplace owners and app developers a hefty paycheck. In 2012 app stores brought in $18 billion; this year they’re expected to earn $26 billion.

Though the report looks at all app stores, Apple and Google’s are certainly the largest, making up 90 percent of the market. In its latest report Gartner also takes a look at an emerging trend in app stores, the in-app purchase. These downloads are also on the rise, and could account for 48 percent of all app store downloads by 2017. While these numbers show some significant growth, Sandy Shen, a research director at Gartner, says it might not always be this way.

“We expect strong growth in downloads through 2014, but growth is forecast to slow down a bit in later years,” said Shen in a statement.

“The average downloads per device should be high in early years as users get new devices and discover the apps they like. Over time they accumulate a portfolio of apps they like and stick to, so there will be moderate numbers of downloads in the later years,” explained Shen.

Download numbers are on the rise, but the Gartner report shows a vast majority of them are free apps, accounting for 91 percent of all app downloads in all app stores. This could explain the rising popularity of in-app purchases.

These apps are often free to download, but extra incentives, packages or options can be unlocked with a purchase in the app store.

“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 Brian Blau, another research director for Gartner.

“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,” Blau said.

Looking forward some four years, Gartner believes in-app purchases could bring in $36.8 billion in revenue while paid-for apps earn a lesser $28.9 billion. Free downloads are also expected to stay on an upward path and account for some 253.9 billion downloads in 2017. Paid apps, though also on an upward streak, are climbing at a much slower pace. By 2017 Gartner expects paid apps will only account for 14.7 billion downloads.

Just as it’s seen anywhere else, advertising can be a major source of income. As app store downloads continue to rise, so too will advertising dollars.

According to TechCrunch, this year app store advertising is only expected to bring in $1.8 billion, a meager amount compared to 2017’s projected $10.6 billion.


Source: Michael Harper for redOrbit.com - Your Universe Online