The launch of the iPad Mini and the continued dominance of the iPad allow Apple to be the premier destination for tablet downloads for the next five years.
The Strategy Analytics App Ecosystem Opportunities (AEO) forecast – Mobile Apps Download Forecast: 2008 – 2017 – predicts that between 2008 and 2017 paid downloads will generate more than $57B globally. However, paid apps begin to decline as free apps come to represent more than 91 percent of all downloads by 2017.
As the percentage of free app downloads continues to grow, the average selling price of all downloaded apps (free and paid) will drop to just 8 cents for smartphone apps by 2017. The decline in revenue and increase in app store maintenance costs – including app approval personnel, marketing, and other maintenance costs – may force app stores to consider new revenue streams or higher revenue splits.
Josh Martin, Director of Apps Research, said in the press release, “Paid downloads remain an essential component of the app ecosystem. Paid downloads will remain an important way for smaller developers to monetize their efforts. For developers committed to paid downloads transitioning to tablets may be the smartest way to preserve the business model over the long term. App Stores will also see a revenue crunch as more revenue is earned from advertising – revenue generated outside the bounds of the app store – and will need to prepare. Newer platforms such as Windows 8, BlackBerry 10, Tizen and Firefox are building their operating systems and storefronts with this knowledge which should go a long way to making them attractive to developers and end users.”
Source: Strategy Analytics
[Attribution: Biz Journals via TechCrunch. Thanks to MacDailyNews Reader “Dan K.” for the heads up.]
Cheap people don’t buy Apps. They don’t read Ads. They don’t spend money on things that are advertised.
Think, Josh Marten, think. Cheapskates get ‘Free’ Android phones because they are cheap. They get free Apps with Ads because they are cheep. They steal music because they are cheap. They don’t spend money on anything, including Ads goods.
How are Ads going to work when no one spends any money through them?
Well, if people spend money they buy the best phones, usually an iPhone, they buy the best games, usually Ad free, they buy movies, music, books and magazines from their ecosystem, usually iTunes.
So, in 2017, Apps will still be sold Ad free, Ad supported Apps will fade away because cheapskates don’t buy and your customers, who listened to you, will be braiding a noose in 5 years.
With the App Store having 1 million apps now, the App Store is becoming the ‘new web’ and apps are the ‘new web pages’. Free isn’t a real problem if there is an advertising support for them. Users of the future may be given the choice of ad supported apps or paid apps.
The internet is changing and may become just an app store. Watch and see.
While predicting that iPad will remain the dominant force in tablets, this article appears to describe the world of apps outside of Apple’s ecosystem.
> The decline in revenue and increase in app store maintenance costs… may force app stores to consider new revenue streams or higher revenue splits.
Apple makes its profit from selling the hardware. That’s Apple’s main “revenue stream.” The App Store is a “value-added service” for Apple’s hardware customers (like the larger iTunes Store), not a profit center. In comparison, Amazon relies on its various online stores to make Kindle profitable.
Apple also has a big efficiency advantage in volume. AND, Apple’s App Store has a significantly higher percentage of paid versus free apps, compared to Android equivalents.
> App Stores will also see a revenue crunch as more revenue is earned from advertising…
Again, does NOT apply for THE App Store and Apple’s business model. In comparison, Google relies on advertising (in any form possible) to make Android profitable.
I predict these issues will not have a significant impact on Apple’s App Store.
Well thought out, Ken.