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Mobile App Stores - A New Mobile Web?
Pyramid Research, Inc., June 2010, Pages: 94
Mobile applications (apps), both free and paid, have experienced exponential growth in recent years. Pyramid Research is forecasting that this growth curve will continue through 2014, though the mobile apps market will evolve differently in different regions. A key driver of mobile app growth is the app store concept popularized by Apple and subsequently adopted by all the major mobile players. Operator portals will need a mixture of agility, compelling apps and local market sensitivity to keep pace. Meanwhile, app developers stand to benefit the most from increasingly aggressive competition for mobile app revenue.
Mobile App Stores: A New Mobile Web? provides in-depth, up-to-the-moment analysis of the mobile content marketplace, focusing on the app stores of major market players such as Apple, Nokia, Research In Motion (BlackBerry), and Microsoft, as well as operator app stores. In addition, the report looks at the sea change in mobile advertising that may be coming with the release of Apple’s OS 4.0 for the iPhone.
Key findings include:
- The impact of application (app) stores on the mobile market should not be understated. We estimate that the total download volume (free and paid) will increase by a factor of seven between 2009 and 2014.
- Although paid apps have increased substantially in volume with the emergence of app stores, free apps have really boomed. In 2010 we project that 36% of paid apps will be downloaded through app stores and 86% of free downloads will take place through them. Advertising revenue as a result has increased substantially, and app stores are working on monetizing this opportunity.
- The mobile apps market will develop in different ways in different regions. These differences are governed by factors such as the penetration of smartphones, share of smartphone platforms (operating systems), operator positioning/strategy and the adoption of different payment methods.
- App stores are an important element in the mobile value chain. A wide range of easily accessible apps has quickly become a prerequisite for handset and platform vendors. Vendors also gain a new revenue stream, a powerful customer loyalty tool, an important gateway to additional revenue streams and an attractive resource for potential operator partnerships.
- Operator app stores have a number of strengths but also face important challenges. Attracting developers is perhaps the most difficult challenge given the lead the vendors have established, platform fragmentation and limited adoption of devices with operator stores enabled.
- The Wholesale Applications Community (WAC) is an attractive vision but faces significant practical challenges. Although the platform is well supported, the different vested interests need to agree on technical specifications, a road map, support, funding, security and payment mechanisms, among other aspects.
- Operators need to manage mobile app downloads through their own stores and their on-deck portals. In progressive markets, operators will likely migrate downloads from the portal to their store as quickly as possible and so be able to dismantle their portals to lower costs. However, most operators with their own store will have to manage the portal as well for several years. In less-developed markets, portals will remain the principal mobile app download channel.
- Developers will be the biggest winners, not only as they gain a higher portion of revenue but also because competition among stores will greatly improve support, payment terms and transparency. These factors will be crucial in enabling developers to decrease their costs and focus on creating innovative and entertaining apps.
- Third-party stores and aggregators will lose out more and more to vendor and operator stores. Consolidation has already started, and we believe the focus of third party stores and aggregators should move to partnering with these new competitors rather than competing with them in the direct-to-consumer space. Operators and vendors are simply too well-placed to embed their own stores onto devices, and they have stronger brands. The case of Getjar, however, is unique, given its size and focus on free apps.
Key questions answered
- What is the current state of mobile apps?
- Are free or paid apps more popular with users?
- What does the app store landscape look like?
- Which players in the mobile app space are most successful, and in which regions?
- How can operators capture a greater portion of revenue from mobile apps?
- How will mobile advertising develop in the next year?
Case studies
- Apple’s App Store
- Google’s Android Market
- Nokia’s Ovi
- BlackBerry’s App World
- Microsoft Marketplace
- Getjar
- Operator app stores
Target audience
Mobile Operators:
This report will help you think through ways to capture a greater share of mobile app revenue by positioning your operator portals to compete more effectively with current app stores.
Investors:
Discover the state of the market for paid mobile apps and which platforms are poised for healthy growth in the coming years.
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