Research firm expects app revenue to jump 92 percent by 2012, mobile carriers to join in

Jun 29, 2011
Finance

Another day, another research firm releasing an analysis of the mobile app market and making predictions about how huge it will be in X amount of time. Yesterday, IDC released a report stating it expected mobile downloads to reach 183 billion by 2015, backed by the power of in-app purchases to make money and drive […]

Another day, another research firm releasing an analysis of the mobile app market and making predictions about how huge it will be in X amount of time. Yesterday, IDC released a report stating it expected mobile downloads to reach 183 billion by 2015, backed by the power of in-app purchases to make money and drive more developers to make their apps free to download.

Today, Canalys, another research firm, took the prediction in a slightly different direction: It released a report that says we should expect mobile app revenues to leap up by 92 percent, just by next year, putting the entire industry at $14.1 billion by the end of 2012.

The story comes from PocketGamer.biz, where they’re reporting that much like IDC’s analysis, Canalys is seeing the growth of the mobile app market driven by in-app purchases and subscription models. Canalys sees revenue for next year increasing over the $7.3 billion already generated in 2011, with continued growth to $36.7 billion by 2015.

One interesting thing about the Canalys report is the role it sees cellular carriers taking on in the future. The research firm points out that carriers have, up to now, been little more than “dumb pipes” for most mobile users, facilitating their ability to buy apps form third-party stores or directly from the makers of their operating systems – namely, Apple, Google, Research In Motion, Microsoft and so on. But with so much money to be made in mobile apps, Canalys sees AT&T, Verizon, T-Mobile and others unwilling to stay on the sidelines forever.

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The research firm states that one area where mobile carriers may be able to get a foot in the door is with app discovery, something that many people inside and observing the mobile app industry point to as one of its big flaws. There are so many great apps out there that many are lost in the constant noise, and carriers might be able to help with that – perhaps through providing markets of their own, creating partnerships, and finding specialized apps that they can then push on to specific demographics of users.

Watch out for Facebook

The idea of carriers getting into the mix and possibly being the answer to Apple and Google’s app discovery issues is an interesting one. Another possible player: Facebook.

An interesting analysis piece from All Things D suggests that Facebook’s rumored web-based mobile app platform, which was leaked earlier this month, might not be about competing for apps with Apple so much as plugging the holes Apple is struggling to patch. Namely, those holes are app discovery and retention.

Great mobile apps today not only can be difficult to discover among all the dregs, they’re also highly disposable. An app might be interesting for a bit, but many users cycle through them quickly, staying with something for only a short time before deleting it. All Things D argues that Facebook might be looking to create a platform that integrates its social network powers more deeply into the app world, allowing developers to get Facebook users inviting one another to use apps, sharing their experiences on the social network, keeping lists of their favorite apps for others to see and maybe even purchasing things in-app with Facebook Credits, the platform’s currency for applications and games.

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With iOS 5 coming out, Apple has gone with Twitter for its social network integration, and that partnership could foster many of the same things that Facebook might be attempting to do, and that carriers would want to do under Canalys’ view of the future. If integrating Twitter into iOS can really drive app discovery by allowing users to basically recommend apps to one another, it could head off much of this discovery problem in the iTunes App Store right at home – leaving carriers and Facebook, along with whoever else, to find new ways to compete in the space.

But Canalys is right that there’s a lot of money to be made in the mobile app space, and that’s why so many players are trying to come up with good ways to capitalize, which is driving innovation. When iOS 5 comes out, it may help change the way apps find their way to our iPhones. We may also start getting FarmVille-style Facebook requests from Netflix apps or the latest Gameloft games. All of it means the mobile sphere and the rest of the world are finding even more ways of meshing together.

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Phil Hornshaw

Phil Hornshaw is a freelance writer, editor and author living in Los Angeles, dividing his time between playing video games, playing video games on his cell phone, and writing about playing video games. He’s also the co-author of So You Created a Wormhole: The Time Traveler’s Guide to Time Travel, which attempts to mix time travel pop culture with some semblance of science, as well as tips on the appropriate means of riding dinosaurs. Check out his profile.

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