The Winding Road to Mobile App-iness

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    Mobile apps are the big thing, and the next really big thing.

    A report by Gartner says that mobile apps are set to explode even beyond where they are today. By 2017, the firm says, mobile apps will be downloaded 268 billion times and will be responsible for $77 billion in revenue.

    Gartner predicts that personalized data streams will provide great revenue opportunities. All in all, apps are as promising as anything on the telecommunications horizon:

    While the vast majority (92 percent) of mobile apps are still free, the data that users are providing – to say nothing of the advertising that almost always accompanies these freebies – is a potential mobile gold mine of its own. This data resource figures to grow exponentially if and when wearable devices and connected household appliances become as common and popular as smartphones and tablets are today.

    The road to app-iness isn’t smooth for everyone, however. TechCrunch offers statistics suggesting significant hurdles for mobile apps. It isn’t entirely clear in the story where each of the statistics comes from, but the trend is clear: In 2012, it cost $1.30 to acquire a loyal user, which is defined as somebody who downloads three apps. That cost rose to $1.62 last year.

    The acceleration of app downloads slowed, which the story says points to maturation of some markets. The story points out that the slowdown may also be due to Apple’s ban on automated downloads at the beginning of 2012. In other words, the slowdown could be due to maturation and to a difference in app store bookkeeping.

    Things also aren’t as rosy as the top-line revenue figure suggests for mobile app developers. In another recently released report, Gartner, which certainly is covering this waterfront, suggests that by 2018 mobile app developers in less than 0.01 percent of cases will think that their apps are financially successful. It’s a bit of a tortured way to look at the category, but the bottom line is simple: Very few people will get rich purely from writing apps, and they understand that to be the case.

    The idea, then, is that other avenues to monetization must be found. The story quotes and paraphrases analyst Ken Dulaney:

    Dulaney notes that the huge number of free, quality mobile applications means that consumer expectations are now biased against paying for apps, even if they only cost a measly $0.99. This means that mobile app developers will need to get more creative either through attracting more advertisements to their apps or building “freemium” apps that are free to download but that charge money for special additional content.

    Advertising, of course, is perhaps the best way to monetize mobile apps. Venture Beat and other sites report that Facebook is running tests on placing ads in third-party apps. That’s the first time, according to the story, that ads are running outside “the Facebook experience.” It’s a small test but potentially a big deal as creative ways are sought to meet Gartner’s lofty $77 billion revenue projection.

    Much more data on mobile app advertising is available from Opera Mediaworks. The firm’s latest findings are reported upon at Inside Mobile Apps. The bottom line: iOS controlled 56 percent of the market during the fourth quarter of 2013, an increase of 6 percent from the third quarter, and Android accounted for 32 percent.

    Carl Weinschenk
    Carl Weinschenk
    Carl Weinschenk Carl Weinschenk Carl Weinschenk is a long-time IT and telecom journalist. His coverage areas include the IoT, artificial intelligence, artificial intelligence, drones, 3D printing LTE and 5G, SDN, NFV, net neutrality, municipal broadband, unified communications and business continuity/disaster recovery. Weinschenk has written about wireless and phone companies, cable operators and their vendor ecosystems. He also has written about alternative energy and runs a website, The Daily Music Break, as a hobby.

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