It may be hard to remember, but when the Apple iPhone had its debut in early 2007 there were only a few apps available for the device — no Angry Birds, Doodle Jump or Netflix.
Today it’s a different story. There are over 350,000 applications available for download on the iOS platform, and after the success of that app platform, downloadable applications spread to almost every other mobile platform too.
But a report released Monday by Forrester Research, the market research company, said the business opportunities associated with apps were just beginning. Forrester estimates that the revenue created from customers buying and downloading apps to smartphones and tablets will reach $38 billion by 2015.
The report, written by John C. McCarthy, an analyst at Forrester, also predicts that the enterprise business opportunities for apps will grow vastly over the next four years. In Mr. McCarthy’s view, corporations will spend up to $17 billion creating apps for their products and working with third-party services and companies that manage these apps. There will also be corporations that will build private applications meant for internal purposes, he says.
Mr. McCarthy estimates that the combined revenues from mobile applications, services and business management will reach $54.6 billion a year by 2015.
Sarah Rotman Epps, an analyst with Forrester who specializes in tablet computers, notes in a company blog post that the tablet market is set to generate a large portion of app purchases in the coming years. Ms. Epps says tablet devices alone will generate $8.1 billion in app sales globally by 2015. In 2010, mobile apps on tablets generated $300 million in sales.
In part the growth of the app market is attributable to technological advances, like the sensors found in smartphones and tablets. Developers have exploited these improvements, and so many new apps take advantage of a phone’s GPS, compass, gyroscope and built-in camera to deliver more succinct and culled information.
Similarly, the rise of 3G and 4G Internet connections for mobile devices has inspired developers to create apps that allow people to watch video on their phones and tablets and interact with social networks in rich and absorbing ways.
The report predicts that a new category of apps will surface over the next few years — ones that will work on a mobile phone and in the cloud, making it easy for people to leave content online that is accessible from their mobile devices. For example, services available today, including Evernote and Box.net, which are both online storage havens, “automatically manage and back up content and files in the cloud,” making personal content available on any device, the report notes.
The report was based on interviews with mobile app vendors, including AT&T and Verizon Wireless, as well as with a number of application creators, including box.ney and Evernote, who have seen mobile apps become a major part of their business.
COMMENTARY: Apple's revenues from the sale of the iPad were approximately $8.4 billion or nearly 14% of Apple's $63.5 billion in total revenues for the year ending December 2010. The only thing that could derail Apple's revenue growth is future sales of tablet computer's. A lot of people are waiting for an iPad-killer, but none has really surfaced. For the year 2011, nearly 30 new tablets are hitting the market, so the competition is definitely going to be there. Whether the new tablets can make a dent in the tablet market remains to be seen. Apps are so important. No apps, no sales.
Keep in mind that Apple had nearly a two year head start in the iPhone and a one-year head start on the iPad. At the end of 2010, there are now 300,000 iPhone and iPod apps in the iTunes store and 60,000 iPad apps. 80% or 288,000 of those apps are free. This means Apple makes money on only about 72,000 of those apps (60,000 iPhone/iPod apps and 12,000 iPad apps). There were about 7 billion app downloads in 2010. If Apple sold $1.7 billion in apps in 2010, this averages out to $0.2428 per app (this includes the free apps).
Courtesy of an article dated February 28, 2011 appearing in The New York Times Technology
Every paradigm shift involves a revolutionary product with a killer app or feature, and it just so happens that smartphones have done this perfectly. With the combination of a very portable device and a variety of quality apps, it's no surprise why the market has significantly grown over the past few years.
Posted by: Annie Britts | 04/24/2011 at 11:14 PM
very informative
Posted by: josh | 04/22/2011 at 02:36 PM