The app store landscape is moving towards segmentation and niche stores

The app store landscape is shifting — as the market for general, first-tier app stores is solidifying, niche stores are increasing, offering customers and publishers new opportunities.

These findings are taken from the new market research report “Smartphone App Market Monitor Vol.4”.

Just like first-tier stores, niche stores have existed in the market since the early 2000s, but have only become relevant since the launch of the Apple App Store. As all the major OEMs and MNOs launched their app stores between 2008 and 2010, 2011 has become the year of targeting niche app user segments.

The number of new niche stores has doubled every year

As seen in the chart below, the number of new niche stores has doubled every year since 2009.

Broadly speaking, there are 3 types of niche stores:

• Platform-oriented: Provides apps for a special OS platform e.g. AndroidPIT, Crackberry.
• Target group-oriented: Provides apps for a specific segment of app users e.g. business or adults.
• Carve outs: Niche store with a full catalogue store e.g. MNOs having their own app store within the Android Market Place or “@work” by Apple.

The growth of niche app stores — particular target group-oriented stores — has been partially fueled by back-end service providers. These service providers enable white label app stores for any company which would like to run its own app store and monetize, for example, the website’s traffic.

Niche stores reflect a market change

The growth of niche app stores also reflects a shift in the market from a platform-driven service offering, to a more sophisticated customer segment-driven one. In the past, the priority for device owners was to look for stores which provided apps that were compatible to their handheld devices. As the number of apps has now dramatically expanded, customers face increasing difficulties in locating specific apps due to the volume of items within these stores. As a result, device owners are now looking for stores which provide them with more streamlined, targeted app selections and results.

The market’s demand for easier search and discoverability of apps will have an impact on both publishers and app stores.

• For a great majority of publishers, niche plays — whether that is a dedicated space in a large app store or a stand alone or aggregator store — present increased opportunities for exposure, hopefully leading to increased downloads.
• For app stores, the rise of niche alternatives indicates that search mechanisms and shelf space will need to increase in order to keep pace with the growth of apps.

What do you think: Are niche stores a normal development of a market which is dominated by a duopoly? Will they have a major impact on the market?

To have a deeper look into the app market world, including niche stores, please find our latest research report “Smartphone App Market Monitor Vol.4”.

To better understand the potential global app development service market please have a look at our “The Market for Mobile Application Development Services (2010-2015)”.