Applications for mobile devices date back to the 1990s, when Palm—by far the largest PDA player at the time—built an open platform that developers soon filled with thousands of applications. Users downloaded applications to PCs and synchronized them with their PDAs.
Enter the Apple App Store in July 2008.
“Apple did not invent either the model of aftermarket applications or the notion of building a store to house them,” says Noah Elkin, eMarketer senior analyst and author of the new report, Mobile Applications: Moving Beyond Apple, “but it did succeed in radically improving an existing idea.”
Excitement over the iPhone and App Store transformed these functional utilities into full-blown consumer experiences. Apple and others in its wake have jolted the mobile advertising market and are paving the way for paid branded applications.
As a result of rising smartphone popularity, eMarketer projects that mobile Internet access will see significant gains over the next five years, with the number of mobile Internet users reaching 134 million in 2013.
Global economic forces are taking their toll on the mobile device market, but smartphones have been spared the ravages of the economic downturn.
Even in the face of a worldwide recession, the International Data Corporation (IDC) expects smartphone shipments to grow by 3.4% this year, and expand at triple the rate of feature phones in 2010.
This sales growth will dramatically reshape the device market. By 2013, Informa predicts smartphones will make up 38% of all handset sales worldwide, more than double their share in 2009.
“As integrated devices grow more sophisticated in functionality and more accessible in price, consumers are responding by upgrading their handsets,” says Mr. Elkin. “And once they have experienced the mobile Internet through improved browsers or installed applications, they appear unwilling to let it go.”
The size of the mobile applications market is something of a moving target, given how quickly app stores are proliferating and their catalogs growing. Piper Jaffray, one of few organizations to project the extent of the growth, estimates that combined spending on consumer and business mobile applications will top $13 billion worldwide by 2012, a nearly fivefold increase over 2009.
“It is increasingly evident that for many marketers, mobile applications constitute a necessary avenue for reaching and engaging with their customers, either by building and marketing a proprietary application or sponsoring a third-party app,” says Mr. Elkin. “In both cases, the essential challenge remains: to understand consumer behavior and craft experiences that not only resonate with a target audience but also integrate with other channels.”