Nowadays, you can’t launch a mobile device without an accompanying app store. Right after the iPhone, Apple launched its App Store – the same for Nokia, RIM, Android and others. In a sort of Marshall McLuhanesqe moment, the app – not the device – will soon become all important.
“Application stores will be a core focus throughout 2010 for the mobile industry and applications themselves will help determine the winner among device platforms,” said Carolina Milanesi, research director for Gartner. Indeed, consumers will spend $6.2 billion in mobile application stores this year, racking up 4.5 billion downloads in 2010.
Earlier this month, Apple alone marked 3 billion downloads since its App Store opened 18 months ago. The Cupertino, Calif. company is earning $2.4 billion a year from the mobile apps, according to one estimate.
More than 21 billion downloads of mobile apps should happen by 2013, Gartner said.
Gartner said the growth of mobile app stores will only continue. “As smartphones grow in popularity,and application stores become the focus for several players in the value chain, more consumers will experiment with application downloads,” said Stephanie Baghdassarian, research director for Gartner. However, with growth will come a number of changes in who does the downloads and how much they’re willing to pay.
“Average smartphone users will become less tech-savvy as smartphones come down in price to have a mass market appeal and these users will be more reluctant to pay for applications,” according to the research firm. In 2010, 82 percent of applications downloaded will be free with 87 percent costing nothing by 2013, Gartner said. The company said early smartphone owners were more willing to pay for mobile applications and trusted the billing system.
Such a trend was already coming into focus in 2009, when in December alone, 75 percent of downloads from Apple’s App Store were free, according to reports. The popularity of free was seen during the Christmas holiday period when ‘Tap Tap Revenge 3‘ was downloaded 2 million times in just one week.
If nearly all mobile applications will be offered without charge, how will developers make money? “Application stores will evolve as rules are set and broken in an attempt to find the most profitable business model for all parties involved,” according to the researchers.
One method for finding profit in free applications is charging for physical good delivered within the application. In 2009, Apple made it easier for developers to offer free apps that included upgrades for a fee. The in-app feature was prompted as some developers looked for green pastures in other app stores.
As revenue from selling apps declines, advertising could take up some of the slack. Gartner expects advertising embedded in mobile applications could generate nearly 25 percent of app store revenue by 2013.