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Mobile App Forecast Up, Up, Up

A “gold rush” with paid apps on the rise

March 25, 2010

Mobile apps are the hot thing to have—among marketers and device users alike. The rush to smartphones and the desire for more apps at an increasing price will lead to an explosion in application store revenues by 2014, according to the Yankee Group.

The research firm previously forecast $537 million in US app store revenues but now expects the stores to pull in $1.6 billion this year. Revenues will be nearly six times as high in 2014, at $11 billion.

US Mobile Application Store Revenues, 2010 & 2014 (billions)

Yankee Group revised its forecast based on several factors, including the increase in use of paid apps. Nearly one-third of apps downloaded are purchased, up from 18% a year ago. Further, individual app prices have risen. The average paid app costs $2.85, compared with $1.99 last year. Increased smartphone shipments also fuel the rise in app store spending.

The iPhone remains a darling, with users downloading three times as many apps a year on average, but other smartphones and carriers are gaining ground.

"Apple's innovative one-click technology and AT&T's exclusive deal for the iPhone put them ahead for now," said Carl Howe, director at Yankee Group, in a statement. "But strong results from T-Mobile suggest that Android will be the next breakout smartphone app platform."

Worldwide, Gartner predicted in January that app store revenues would reach nearly $6.8 billion in 2010, increasing to nearly $30 billion by 2013.

Mobile Application Stores Downloads and Revenues Worldwide, 2009, 2010 & 2013 (millions)

But Gartner also predicted an increase in the proportion of app downloads that were free.

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Check out today’s other article, “Experienced Users Less Concerned with Security.”


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