Free apps market to boom in 2012, says Gartner

by CXOtoday News Desk    Sep 11, 2012

apps storeFree apps is expected to account for 89 percent of total downloads in 2012, according to research firm Gartner. The worldwide mobile app store downloads will surpass 45.6 billion in 2012, with free downloads accounting for 40.1 billion, and paid-for downloads totaling 5 billion, it said.

“In terms of the apps that consumers are buying, 90 percent of the paid-for downloads cost less than $3 each,”” said Sandy Shen, research director at Gartner. Shen added that Similar to free apps, lower-priced apps will drive the majority of downloads. Apps between 99 cents and $2.99 will account for 87.5 percent of paid-for downloads in 2012, and 96 percent by 2016.

Gartner noted that Apple’s App Store will have more than 21 billion downloads in 2012, which is an increase of 74 percent over 2011. This also indicates continued strong demand for mobile app content.

“Apple’s market share is the largest, considering its App Store that accounts for 25 percent of available apps in all stores,” said Brian Blau, Research Director at Gartner. According to him, the number of apps available is driven by an increasing number of stores in the market today that include platform owners, device vendors, communication service providers (CSPs) and others who want to offer core mobile app services. These stores will see their combined share of total downloads increase, but demand for apps overall will still be dominated by Apple, Google and Microsoft, said Gartner.

Besides a few major app stores from global OS vendors (such as Apple’s App Store, Google Play and Microsoft’s Windows Phone Marketplace), Gartner said that also third parties that attract users with their brands or take advantage of the lack of dominant players will evolve in some markets.

Amazon that appealed to users with its strong brand, global presence and high-quality content and Facebook’s recently launched App Center that supports both mobile devices and desktops are expected to become powerful competitors,” said Shen.

In-app purchases will drive 41 percent of the store revenue in 2016, said Gartner. While the market is moving toward free and low-priced apps, in-app purchases will drive downloads as well as app store revenue. Blau said this type of business model will increase and open the door to a recurring revenue stream for developers, but app performance and design will always be the most important factor when attracting new users and keeping them satisfied.

Gartner expects the number of downloads featuring in-app purchase will increase from 5 percent of total downloads in 2011 to 30 percent in 2016, and its contribution to the store revenue will increase from 10 to 41 percent in the same period.