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Report: Mobile Apps Will Outsell CDs by 2012

Wed, 03/17/2010 - 8:18am
Monica Alleven

How popular are mobile apps? If some recent research is any indication, the market will be worth $17.5 billion in two years' time.

GetJar, which bills itself as the world's second largest app store, commissioned a report by Chetan Sharma Consulting that estimates mobile app downloads across all types of handsets will increase from more than 7 billion downloads in 2009 to almost 50 billion in 2012 – a year-on-year growth rate of 92 percent. That means the value of apps sold would be greater than the value of CDs sold in 2012, estimated at $13.83 billion.

That's a pretty big market value, points out GetJar CEO and founder Ilja Laurs, and part of the impetus behind commissioning the research was to get a better idea of the market size. GetJar executives felt that prior research didn't disclose the complete picture and tended to focus on developed markets.

Chetan Sharma, president, Chetan Sharma Consulting, says he took a more holistic view of the global mobile apps market and built a ground-up model that took into account how the overall apps consumption is evolving across various dimensions.

Clearly, the direction for apps is going from on-deck to off-deck. By 2012, off-deck paid-for apps will be the biggest revenue generator, accounting for almost 50 percent of all apps revenue. By comparison, in 2009, on-deck apps available from mobile operators accounted for over 60 percent of all apps revenue, but this will fall significantly to just under 23 percent by 2012, according to the research.

While there's a lot of attention on free apps, an advertising-based revenue model may be the way to go for more and more developers. In 2009, advertising contributed almost 12 percent of the overall apps revenue, but that share is expected to more than double to more than 28 percent by 2012.

The study also outlines opportunities for both high-end smartphones (such as BlackBerry and Android-powered handsets) and feature phones (such as the Samsung Instinct/Jet and Nokia X6). In 2009, 90 percent of handsets in use worldwide were so-called feature phones, while smartphones and data cards accounted for the remaining 10 percent of the market.

Sharma says the middle category – between smartphone and feature phone – is getting more difficult to separate out. Devices like the Instinct, which is a 3G device with capabilities for video, applications, e-mail and up to 8 GB, can't be confused for a feature phone, but because it's a Java phone, some might categorize it as such. The first phone by INQ Mobile was a social mobile device based on Brew, which is hardly considered a smartphone platform, yet its mobile data usage is higher than even the iPhone, he says.

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