Global Revenue from Mobile Application Store Downloads Could Top $15 Billion in 2011

By the end of 2011, revenue worldwide from mobile application store downloads could exceed $15 billion, amounting to a 190 percent spike from the $5.2 billion generated last year, according to researcher Gartner Inc.

The researcher said that it expects some 17.7 billion mobile application store downloads in 2011, a 117 percent boost from the 8.2 billion downloads in 2010. Revenue is generated from end users buying applications and developers garnering advertising revenue from the applications, Gartner said.

Gartner forecasts that by the end of 2014, some 185 billion applications will have been downloaded from mobile application stores since mid-2008.

"Many are wondering if the app frenzy we have been witnessing is just a fashion, and, like many others, it shall pass, said Stephanie Baghdassarian, research director at Gartner. "We do not think so," she said.

"We strongly believe there is a sizable opportunity for application stores in the future," she said. "However, applications will have to grow up and deliver a superior experience to the one that a Web-based app will be able to deliver."

Baghdassarian said that "native apps will survive the Web enhancements only when they will provide a more-personal and richer experience to the 'vanilla' experience that a Web-based app will deliver."

Gartner said that the year-over-year spurt in application downloads is being prodded not only by Apple Computer Inc.'s App Store but also from others that have gained traction such as Android Market, Nokia's Ovi Store, Research In Motion's App World, Microsoft Corp.'s Marketplace and Samsung Apps.

"We estimate that Apple's App Store drove close to nine application downloads out of 10 in 2010 and will remain the single best-selling store across our forecast period (through 2014), although to a lesser extent, as other stores manage to gain momentum," said Carolina Milanesi, a Gartner research vice president.

Milanesi said that media tablets will add fuel to the number of downloaded applications.

"While the average number of downloads per device onto a smartphone will remain stable as the market grows, it must be assumed that media tablets will drive more downloads from consumers, boosting the overall average downloads per device," she said. 

Gartner expects that free downloads will account for about 81 percent of the total mobile store downloads in 2011, a percentage that has been declining as users see more value in mobile applications and trust billing mechanisms, the researcher said.

Baghdassarian cautioned application store owners not to rely solely on the industry's wave to carry them.

"Application stores have become a highly visible and potentially lucrative part of the smartphone 'ecosystem, largely due to Apple's App Store," she said. "As well as promising revenue, application stores allow store owners to leverage innovation from a community outside their own R&D department," she said. 

"Application store owners need to rise to the challenges of attracting developers, organizing content and engaging users throughout the life of the store in order to remain profitable."

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