Mobile app revenues to exceed $30 billion by 2015

Analysts Juniper Research www.juniperresearch.com forecast that, the combined revenues from apps funded by pay-per-download (PPD), value-added services (VAS, including “freemium” and subscription) and advertising, including apps on portals and dedicated app services like iTunes etc is expected to rise from just under $10 billion (£6.9 billion) in 2009 to $32 billion (£20.7 billion) in 2015. And that’s working on Apple’s old figures as the report quotes 4 billion downloads by April 2010 where Jobs announced on Monday (7 June) that it was 5 billion and no doubt rising even faster as iPad users get app download crazy.

However while the figures look massive the report cautions that brands and developers should not ignore users of other platforms/handsets, and we agree wholeheartedly with this. According to Juniper, “such a move could be counterproductive, particularly in developing markets, where the user base of iPhones (and indeed smartphones per se) is extremely low.”

“If the mobile industry wishes to introduce a model based on applications, then it must ensure that those applications are accessible by a wide range of handsets ranging from smartphones to mass market devices,” said report author, Dr Windsor Holden.

The report also cautions that the majority of application downloads from the Apple iTunes app stores are free. “Other storefronts launched in the wake of the Apple app Store also report that comparatively small proportions of apps (typically 5-15%) are paid for. Thus, building a business model aimed at both maximizing consumer adoption of applications and at maximizing content revenues can be extremely problematic.”

The mobile apps report finds that an app store-centric model presents a number of challenges, including:

• The Need for Scale
• Monetising the Mass Market
• App Store Overload
• The Content Legacy

What the research doesn’t reflect is the renewed interest in apps that platforms like the tablet and iPad have engendered. Jobs revealed on Monday that the average iPad user downloaded 17 apps, and that’s in just two months, that’s significantly more than the average iPhone smartphone user downloads.

There’s potentially more money in the iPad market than the smartphone download market and while it will take a long time to get the 100 million “IOS” devices, when it does there’s potentially huge revenues because;

a) It’s a bigger device and generally we’re used to paying more the bigger the screen we’re viewing things on
b) After the initial payment there’s no £30+ monthly payments eating the app revenue up, so the kitty for app spending is higher.