Preview: Global Smartphone Application Market 2010

Update: Review the details on the newly released report and the available package options.
The following article is an abstract from the Global Smartphone Application Market Report 2010.

The launch of Apple’s App Store created incredible hype in the mobile industry and beyond. The mobile applications market has grown in value to almost US$2 billion in the last two years. Companies all over the world scrambled to publish their first apps, while handset manufacturers and mobile operators rushed to open up their own application stores. The number of newly published apps rose dramatically with a compound annual growth rate (CAGR) of almost 180% in the last two years.

Figure 1: Number of new apps (2007 – 2009)¹


What are the main drivers of this rapid expansion?

On the platform side, the mobile industry had long tried to jumpstart the mobile content business with little success. Suddenly, an outsider (Apple) demonstrated how the business can thrive by creating a whole new integrated ecosystem (hardware, on-deck-store, and developer portal). Other handset manufacturers and MNOs are now trying to emulate this successful model by opening their own app stores and bringing new smartphones to the market.

On the publisher side, small boutiques leveraged the ability to sell their apps to customers in a direct and effective way that was not possible prior to the launch of the App Store. Larger companies are also making first steps into the app market: as of today, only about 10% of all Fortune 2000 companies have published mobile apps, yet more than 80% have indicated the intention to increase their participation level in the market through the release of apps.

The increasing interest of companies in using mobile applications as a channel to their customers is shown in the following graph:

Figure 2: Future corporate engagement levels in the mobile market

84% of Fortune 2000 companies intend to increase their engagement level in the market in 2010.

These figures are based on the insights of more than 100 leading companies worldwide that participated in our 2009 mobile application market survey.

Some other insights of our survey:

  • More than 90% of corporations that have published apps concentrate exclusively on the Apple App Store.
  • The main function of existing corporate apps is to give access to the company’s core product.
  • The vast majority of corporate apps lack a clear business model.
  • Almost 30% of the corporate apps have so far failed to reach their set goals.
  • Increased activity in mobile apps will result in a large volume of corporate-backed apps hitting the stores.
  • Multi-platform strategies will gain traction through Android, BlackBerry and widget-based platforms such as Vodafone360.
  • All major OEMs and MNOs will have their own app stores in 2010.

How do I identify the best point-of-entry for my company?

With the advent of the Apple App Store, the whole app ecosystem has been pushed to another level – one that offers more choice, but more complexity. The rapid pace of industry growth is clear from the number of application stores that have recently opened or are set to launch in the coming months.

Selecting the right application store and technology platform becomes one of the most crucial decisions when entering the market, as almost all major handset manufacturers and mobile carriers will feature an application marketplace in 2010 to sell apps to their customer base. Due to the lack of established industry development standards, most of those marketplaces offer proprietary development and publishing solutions. Multi-platform development will become an increasingly complex issue over the next two to three years, until sufficient technology solutions and standards are available. This means that choosing the right app store is critical to the success of your app.

How long will the hype last – and what comes next?

Within the very short time frame of only one and a half years, the mobile application market has developed from a niche sub-industry to a billion dollar market. The significance of this feat is made even more apparent by acknowledging that only a few application stores aside from Apple’s App Store managed to generate notable revenue in 2009. Despite 2009’s unprecedented expansion of the market, our research indicates that 2010 will be even more remarkable in terms of growth:

  • The coming year will see more than 30 broad-based application stores aggressively pushing to expand their offerings.
  • Additionally, there may be hundreds of niche stores offering access to specific customer bases.
  • Providing advanced search and discovery mechanisms will be one of the main enablers for growth in 2010.
  • Supporting industries (e. g. application analytics, advertising networks, hosting and payment services) will become more and more professional.
  • Revenue models will become more attractive to corporations due to a growing shift from pay-per-download to transaction- and advertisement-based products.

Within the application development market, we will also see increasing focus on new smartphone hardware, as well as on less capable handsets. The latter will be driven mainly by mobile operators concentrating more on web-based application models, rather than native apps. Successful corporate market players are already anticipating this development and including more web-based applications in their portfolios.

More details on the newly released report and the available package options available at our research page.

¹New additions of apps are based on the following stores as of 12/09: Apple App Store, Blackberry App World, Android Market, Windows Marketplace, Nokia Ovi Store, Samsung Application Market, LG Application Market, PlayNow Arena, Palm App Catalog, Vodafone 360, O2 Litmus Store, China Mobile Market, Verizon Vcast, Orange Application Shop, AT&T MEdiaMall, web2go, mStore, SK-Telecom T-Store, KT-Telecom Show App Store, TelstraOne and other niche stores.

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