A new report published by Juniper Research forecasts that the combined revenues from apps funded by pay per download (PPD), value added services (VAS, including freemium and subscription) and advertising is expected to rise from just under $10 billion in 2009 to $32 billion in 2015.
But while Apple’s App Store has achieved app downloads on an unprecedented scale – four billion by April 2010 – the report cautions brands and developers against ignoring users of other platforms and handsets. According to Juniper, such a move could be counterproductive, particularly in developing markets, where the user base of iPhones (and indeed smartphones per se) is extremely low.
“If the mobile industry wishes to introduce a model based on applications, then it must ensure that those applications are accessible by a wide range of handsets ranging from smartphones to mass market devices,” said report author, Dr Windsor Holden.
Furthermore, uplift in download volumes does not necessarily equate to an uplift in industry revenues. The majority of application downloads from the App Store are free; other storefronts launched in the wake of the App Store also report that comparatively small proportions of apps (typically 5%-15%) are paid for. Thus, building a business model aimed at both maximizing consumer adoption of applications and at maximizing content revenues can be extremely problematic.
The mobile app stores report finds that an app store-centric model presents a number of challenges, including: the need for scale; monitising the mass market; app store download; and the content legacy.