Report: Consumers Will Be Gaga for Mobile Apps by 2012

The global market for mobile phone applications is expected to soar to US$17.5 billion by 2012, surpassing the total value of CDs sold, new research forecasts.

The revenue from mobile apps is expected to increase at a 62 percent compound annual growth rate from $4.1 billion in 2009 to $17.5 billion in 2012, according to a research report by Chetan Sharma Consulting. In comparison, the total value of CDs sold is only expected to approach $13.8 billion by the same year.

Is the $17.5 billion in revenue forecast for mobile apps realistic?

“That is a lot of money,” said Maribel Lopez, an analyst with Lopez Research.

“It would suggest that we would be paying more for apps down the road, which I don’t think is out of the realm of possibilities,” she told the E-Commerce Times. “There is going to be a phenomenal amount of growth in the mobile apps market. You’re going to see richer apps. Given that, the cost of apps has room to grow.”

Place Your Bets

It is tough to make accurate projections, especially in an emerging information technology market, to determine where the marketplace for mobile apps will end up in two years, Charles King, an analyst with Pund-IT told the E-Commerce Times.

“If you wanted to double down your bets on something in the IT industry, the mobile applications market would probably be a good one to do it in,” he said. “We have seen an explosion of interest in smartphones.”

Everyone is trying to grab onto the coattails of Apple’s iPhone, King said, predicting that competition for smartphones is just starting to get under way with Google’s Android and the expected launch of Windows Phone 7 Series handsets later this year.

“You are going to see an absolute flood of new phones introduced in the latter half of 2010,” predicted King. “There is going to be a lot of activity through 2010 and well into 2011 that would make near 100-percent growth, year-over-year, entirely possible”

Apps purchased by users are expected to be the largest revenue generator by 2012, reaching almost 50 percent of all app revenue, according to Chetan Sharma. In comparison, operator managed app revenue totaled more than 60 percent in 2009.

GetJar — the second largest app store, exceeded only by Apple iTunes, provides more than 60,000 mobile apps across all major handsets and platforms in more than 200 countries — commissioned the report to learn more about the mobile apps market.

Taking Control

The echo system that phone manufacturers have created in the past couple of years by taking the apps away from mobile phone carriers and making them available in app stores has helped develop the marketplace, said Lopez.

“Now, instead of going to Verizon, you just work with Google directly,” she explained. “It takes the control of application distribution out of the carrier’s hands.”

The low cost of most apps encourages consumers to take a chance, observed King. “It has opened people’s minds and pocketbooks.”

While some apps are never used more than once, others catch fire and make a market splash, he said.

“What Apple has shown with the iPhone is that there is a real thirst out there among consumers and business people for devices that can improve their mobile computing lives,” King concluded. “I think we are on a threshold of a significant change.”