According to the analysts at research firm Gartner, mobile application stores are expected to generate revenues of nearly $7 billion over the course of this year. That figure is a combination of the $6.2 billion spent purchasing the mobile applications themselves combined with an additional $.6 billion generated through advertising revenues from in-app ads. Not surprisingly, Apple dominates this market, accounting for 99.4% of the market as of last year, states the report.
Over the course of 2009, mobile application download revenue exceeded $4.2 billion, with eight out of every 10 apps downloaded offered free to end users, says Gartner. Going forward, the analysts predict mobile application stores’ revenue will grow to $29.5 billion by the end of 2013. That revenue, again, will be a combination of paid applications and free applications running ads.
3 Billion in Apple App Sales? Not Exactly
While we’re sure the general trend is correct as far as the growth of mobile application stores and Apple’s position as the market leader, we have to agree with the note that John Gruber recently made on his blog regarding these figures. He quotes a portion of the report where analyst Chris Foresman says:
Earlier this month, Apple announced that sales had topped 3 billion; that means iPhone users downloaded 2.5 billion apps in 2009 alone. Gartner’s figures show another 16 million apps that could come from other platform’s recently opened app stores, giving Apple at least 99.4 percent of all mobile apps sold for the year.
Gruber notes that Apple didn’t actually announce 3 billion in sales, they announced 3 billion downloads. In fact, you can see the original press release making this announcement here. Not only that, but another Gartner analyst Miguel Fontanez told us earlier this month that Apple, as a rule, does not disclose App Store revenues as a separate line item in their revenue reporting. That means that any estimation of Apple’s App Store sales are just that – an estimation.
Last week, in speaking with Peter Farago of Flurry analytics to calculate App Store piracy numbers, we determined that Apple had generated approximately $750 million in sales to date. That’s 3 billion downloads over the lifetime of the App Store with roughly 25% of them being paid downloads. In other words, if Gartner used the 3 billion to determine Apple’s position as the market share leader in sales, then their calculations would be off.
However, as Gruber also notes, if Gartner’s calculations are accurate regarding the other mobile platforms (16 million in app sales, they claim), then it’s clear that Apple still has the app store to beat… even if they don’t account for 99.4% of the market.
We don’t expect Apple’s dominant position to change anytime soon – the company has momentum. In November 2009, Apple announced they offer over 100,000 applications and by now that number has likely grown even more. However, other mobile application stores are growing quickly, too. Google’s Android marketplace, for example, with its open nature unhampered by any sort of bogged-down app review process, has now topped 20,000 applications as of December. The Android mobile operating system is growing in popularity, too (usage increased 3% over the past three months), meaning it will soon be a contender for a hefty slice of that the app store pie in years to come.
