With 50 full catalog app stores, the market has reached its limit. Consolidation has begun.

Over the last 3 years most MNOs and OEMs were aiming to provide app stores with a full range of native apps – some players even ran more than one store at the same time. 2010 was a watershed year for app store openings, only a few of those new entrants, however, have since managed to attract enough developer attention. As a consequence, 2011 marked the beginning of a shake-out in the app store market. In order to be successful, new entrants will either have to concentrate on new technologies (Web apps) or target niche segments (e.g. business app stores).

See more insights in the new Smartphone App Market Monitor Vol.5.

The development of the app market (2000-2011) – four phases

In comparison to 2010, the app store market for full catalogue stores in 2011 largely settled, with only a few new entrants (excluding the market for niche stores). Some stores, which may have looked promising in 2010, succumbed to market pressures and closed, combined their offerings, or were slowly fizzling out at the close of 2011.

App_Store_Race

The Apple App Store and the Android Market (now Google Play), however, continued to gain momentum during 2011. They both added a significant amount of content and attracted increasing numbers of downloads – more than 1 billion per month each by Q4 2011.

Looking back at the development of the app store market since 2000, the last 12-14 months appears to be a phase of consolidation following three distinct phases of growth:

  • Phase I: Pre-Apple App Store

Between 2000 and 2007, there were a handful of independent and MNO stores which offered content largely catering to feature phones: small games, wall paper, ring tones, etc. While these stores garnered attention and were successful in their own right, their offerings and design had little content focus and were limited by the devices being used.

  • Phase II: Apple’s Launch (and other early movers)

After the release of the iPhone, Apple launched the game-changing Apple App Store with content to take advantage of smartphone capabilities. Google was close behind with the Android Marketplace as well as Palm, Verizon (MNO), and Pocketgear (Independent).

  • Phase III: Proliferation

App store providers from all corners of the market – MNOs, OEMs, Independents – jumped on Apple’s initial success and brought out their own offerings.

  • Phase IV: Consolidation

Since the latter half of 2010, the number of app store openings has dropped off significantly as all major providers had already launched their stores. At the same time, stores which failed to attract a significant level of apps within a reasonable period (a threshold of around 3,000 apps) began to close their web interfaces or close down altogether – e.g. Palm Software Store, Symbian Horizon, Pocketgear, O2 Litmus, Playnow Arena, Windows Store for Mobile, etc.

Looking ahead, 2012 will likely see more consolidation

 

  • The app store “duopoly” is growing: The Apple App Store and Google Play (Android Marketplace) show no signs of slowing as the number of apps, users and download numbers continue to snowball.
  • More stores will exit the market: Microsoft has already announced it will shut down the Windows Store for Mobile altogether in May to focus on the Windows Marketplace. Other stores – e.g. Mobihand – have appeared to be under financial duress and looking for new monetization strategies or to be acquired.

 

Is there still room for new entrants?

At this point, any new market entrant will need to provide something fundamentally different to what Apple and Google are offering, or invest a significant amount of money (e.g. Microsoft’s investment in the development of the Window’s Phone Marketplace).

One possibility for new entrants is to target niche segments of the market. Niche app stores blossomed in 2011, numbering near 100 by the end of the year. The focus of these stores range from OS-specific, to quality curation, to consumer groups like Enterprises.

Another possibility for entrants may be through web apps stores facilitated by the development of mobile browsers. As of late February, Mozilla opened its platform independent “Mozilla Marketplace” to developer submissions of HTML5 web apps. While this store will essentially compete with Google’s Chrome Web Store, it also complements Mozilla’s planned release of its own smartphone based on its “Boot to Gecko” (B2G) web engine. As the entire phone’s native device capabilities will be accessible using HTML5, web apps will not lack functionality.

At this point, the release of the Mozilla phone is planned for regions where existing smartphones are largely too expensive. However, depending on the capabilities and success of the phone as well as Mozilla’s ability to have B2G technologies standardized by the World Wide Web Consortium (the primary international standards organization for the world wide web), the “Mozilla Marketplace” (and possibly Google’s Chrome Web Store) could become a considerable force in the app store market.

 

What do you think: Where is the app market headed in 2012? Could plans by Mozilla and Google (In February Google released a beta version of Chrome for Android for mobile devices running Android 4.0 (Ice Cream Sandwich) eventually make web app stores viable competitors against native app stores?

To have a deeper look into the app market world, including metrics and analysis on full catalogue and niche app stores, please find our latest research report, “Smartphone App Market Monitor Vol.5”. The Smartphone App Market Monitor is available as a:

PDF Report (61 pages report including graphs and tables plus written explanation): The Smartphone App Market Monitor Vol.5 – PDF

PPT Slides Set (50 slides set containing the report’s graphs and tables for easy usage in your presentations): The Smartphone App Market Monitor Vol.5 – PPT

Bundle of PDF Report plus PPT Slide Set (both above products): The Smartphone App Market Monitor Vol.5 – PDF&PPT

One-year subscription (buy the first report immediately and get the following updates sent to your email address directly): The Smartphone App Market Monitor Vol.5 – 1-year subscription

This post currently has 9 responses.

  1. […] App Stores befinden sich am Ende der Konsolidierungsphase: Laut dem “Smartphone App Market Monitor” von ResearchToGuidance folgte der Aufbruchstimmung im Jahr 2010 mit 30 Neugründungen eine Zeit der Konsolidierung mit Zusammenschlüssen und dem Ausscheiden erfolgloser Wettbewerber. researchtoguidance.com […]

  2. Kai Lukoff says:

    Does this count the 40+ Android app stores in China? Our service Wandoujia aggregates about 20 of them. Though fractured now, I think the general trend will be towards consolidation here too.

  3. Grace Gair says:

    No – this is just a count of each of the store “concepts” by OEMs, MNOs, and Independents (must be a full catalogue (aggregates across devices, os and categories, e.g. GetJar as opposed to something like Crackberry).

    In short, we are not counting multiple, country versions of a store or what we have dubbed as “niche stores” (as noted in the blog; these stores focus on a particular OS, device, topic (i.e. games, enterprise, adult, etc.) service provision, app aggregation, etc.).

    Based on my observations, I would agree with you regarding some consolidation there too. After updating our “niche” list over the past few days, there have been some closures since Q3 amongst these niche stores, though there are still new openings.

  4. Kai Lukoff says:

    Thanks for the clarification Grace! I agree the OEM or MNO cross-platform “store concept” is on its way out, or at the least faces severe consolidation.

    But I don’t think serving a single OS makes a store “niche,” especially in the case of Android and China. Some of the larger Android-only stores here (AppChina, Hiapk, Gfan, etc.) deliver several million app downloads per day and have catalogs of ~100,000 apps, a scale and breadth of content that far surpasses most of the stores by OEMs and MNOs. They’re not fan forums, but rather replacements for the Android Market which is incomplete and intermittently blocked in China. Just some food for thought for the next report–keep up the good work!

  5. Good article Grace. I wrote about app store consolidation more than two years ago, as a guest post:

    http://www.visionmobile.com/blog/2010/01/the-mobile-app-store-landscape-5-years-ai-after-the-iphone/

    I argued that there would be a “winner-take-all” outcome for each platform. Other than niche players, one app store would take nearly all the market share. It was a controversial piece given the proliferation of app stores at that time. Consolidation is more evident now, however.

  6. Mark Helmuth says:

    Why is there no mention of the Amazon AppStore in this article?

  7. Grace Gair says:

    @ Mark Helmuth – Hi Mark, thanks for your question. We did not cover the Amazon store because this post focuses on non-niche stores. For research purposes we categorize app stores into one of four “buckets”: OEM/OS Stores (e.g. Google Play), MNO Stores (e.g. AT&T’s App Center), Independents (e.g. Mobihand) and Niche Stores (e.g. Amazon App Store). Thus, this post looks at OEM/OS, MNO and Independent store numbers specifically.

    As mentioned in the start of this post, while signs of consolidation are evident among the first three types of stores, niche stores – like Amazon – are continuing to proliferate and many have grown leaps and bounds over the last months. Our previous post “The app store landscape is moving towards segmentation and niche stores” looks at the trends surrounding these niche stores.

  8. […] These findings are part of research2guidance’s latest report “Smartphone App Market Monitor Vol.5 2011”.   The year 2010 was a watershed year for app store openings – more than 30 – with many MNOs and OEMs aiming to provide app stores with a full range of native apps. Only a few of those new entrants in 2010, however, have since managed to attract enough developer attention.   In 2011 the app store market for full catalogue stores largely settled, with only a few new entrants (excluding the market for niche stores). Some stores, which may have looked promising in 2010, succumbed to market pressures and closed, combined their offerings, or were slowly fizzling out at the close of 2011.   The Apple App Store and the Android Market (now Google Play), however, continued to gain momentum during 2011. They both added a significant amount of content and attracted increasing numbers of downloads – more than 1 billion per month each by Q4 2011.   Looking ahead, 2012 will likely see more consolidation:  The app store “duopoly” is growing: The Apple App Store and Google Play (Android Marketplace) show no signs of slowing as the number of apps, users and download numbers continue to snowball.More stores will exit the market: Microsoft has already announced it will shut down the Windows Store for Mobile altogether in May to focus on the Windows Marketplace. Other stores – e.g. Mobihand – have appeared to be under financial duress and are looking for new monetization strategies or to be acquired.   At this point, any new market entrant will need to provide something fundamentally different to what Apple and Google are offering, or invest a significant amount of money (e.g. Microsoft’s investment in the development of the Window’s Phone Marketplace).   One possibility for new entrants is to target niche segments of the market. Niche app stores blossomed in 2011, numbering near 100 by the end of the year. The focus of these stores range from OS-specific, to quality curation to consumer groups like Enterprises.   Another possibility for entrants may be through web apps stores facilitated by the development of mobile browsers. As of late February, Mozilla opened its platform independent “Mozilla Marketplace” to developer submissions of HTML5 web apps. While this store will essentially compete with Google’s Chrome Web Store, it also complements Mozilla’s planned release of its own smartphone based on its “Boot to Gecko” (B2G) web engine. As the entire phone’s native device capabilities will be accessible using HTML5, web apps will not lack functionality.   At this point, the release of the Mozilla phone is planned for regions where existing smartphones are largely too expensive. However, depending on the capabilities and success of the phone as well as Mozilla’s ability to have B2G technologies standardized by the World Wide Web Consortium (the primary international standards organization for the world wide web), the “Mozilla Marketplace” (and possibly Google’s Chrome Web Store) could become a considerable force in the app store market.   To have a deeper look into the app market world, including metrics and analysis on full catalogue and niche app stores, please find our latest research report, “Smartphone App Market Monitor Vol.5”.      Link to report:http://www.research2guidance.com/shop/index.php/smartphone-app-market-monitor-vol5-pdf  Link to blog post:http://www.research2guidance.com/with-50-full-catalog-app-stores-the-market-has-reached-its-limit.-c… […]

Leave a Reply

Your email address will not be published. Required fields are marked *


    techcrunch
    fda
    computerworld
    fiercemobilehealthcare
    mobilworldlive
    bloomberg
    newyorktimes