8/10 Apps Free, 4.5 Billion Apps Downloaded, $6.2 Billion in 2010, Says Gartner

Gartner Analysts said mobile app stores will exceed 4.5 billion downloads in 2010, eight out of ten of which will be free to end users. Consumers will spend $6.2 billion in
2010 in mobile apptores while advertising revenue is expected
to generate $0.6 billion worldwide, according to Gartner, Inc.

Gartner forecasts worldwide downloads in mobile app stores to
surpass 21.6 billion by 2013 (see Table 1). Free downloads will account
for 82 per cent of all downloads in 2010, and will account for 87 per
cent of downloads in 2013.

Table 1
Mobile Application Stores' Number of Downloads and Revenue, Worldwide

Source: Gartner (December 2009)

An application can be free because the developer is
offering it at no cost to the consumer while charging for other things
within the application. There are also applications that are free to
use but that charge for physical goods that you can have delivered
through the application. There are many applications that are free to
users and derive their revenue from advertising. This can be done with
banners as well as full page advertising between game levels for
instance.
"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 at Gartner. "Games remain the No. 1 application, and
mobile shopping, social networking, utilities and productivity tools
continue to grow and attract increasing amounts of money."


Worldwide mobile application stores' download revenue exceeded $4.2
billion in 2009 and will grow to $29.5 billion by the end of 2013. This
revenue forecast includes end-user spending on paid-for applications
and advertising-sponsored free applications. Advertising-sponsored
mobile applications will generate almost 25 per cent of mobile
application stores revenue by 2013.

High-end smartphone users today tend to be early adopters of new mobile
applications and more trustful of billing mechanisms, so they will pay
for applications that can meet their needs. 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.

"Growth in smartphone sales will not necessarily mean that consumers
will spend more money, but it will widen the addressable market for an
offering that will be advertising-funded," Ms Baghdassarian added. "The
value chain of the application stores will evolve as rules are set and
broken in an attempt to find the most profitable business model for all
parties involved."

"Application stores will be a core focus throughout 2010 for the mobile
industry and applications themselves will help determine the winner
among mobile devices platforms," said Carolina Milanesi, research
director at Gartner. "Consumers will have a wide choice of stores and
will seek the ones that make it easy for them to discover applications
they are interested in and make it easy to pay for them when they have
to. Developers will have to consider carefully not only which platform
to support but also which store to promote their applications in."