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App Purchases Are Adding Up

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Recession? What recession? According to a survey from ABI Research, many U.S. consumers are spending hundreds of dollars per year on mobile applications. Over 15 percent of those surveyed had spent nearly $100 over the past twelve months and a surprising 16.5 percent had spent between $100 and $500 during that same time frame.

Apple’s Impact on Mobile App Sales

With the high level of spending being reported, those unfamiliar with the mobile industry could easily be led to believe that mobile applications must cost a pretty penny. However, just the opposite is true – mobile applications are relatively inexpensive – often only a dollar or two on iTunes for example. That makes the amount of money being spent all the more telling – people aren’t just buying apps, they’re buying a lot of apps.

Yet it’s those App Store prices that ABI analyst Jeff Orr claims are hurting the overall mobile industry. “If you exclude Apple from the mix, applications for other platforms cost about $7-25 each,” he says. “Many developers, lacking the resources to author applications for all available smartphone platforms, have to focus on one. That means they have a ‘margin vs. volume’ quandary: sell many copies for the iPhone at a very low price of which the developer receives 70%, or sell fewer via one of the other application storefronts, but charge a higher price and earn more per transaction.”

On the other hand, however, Orr notes that Apple did a lot for the industry with their marketing campaigns for mobile applications. Their efforts led to sort of a ‘halo’ effect that has positively impacted the sales of apps on non-Apple platforms.

Some Big Caveats About These Numbers

Before everyone takes these survey numbers to the bank, though, it’s important to look at them a bit more closely.

First of all, the sample size of this survey was far too small – only 235 smartphones owners were involved. That may be enough to hint towards a trend that requires further research, but it’s not large enough to drawn any concrete conclusions from.

Secondly, smartphone users who didn’t install an application weren’t included in the survey so, obviously, the data is skewed here as well. The survey results seem to imply that application purchases are something all smartphone owners do, but that is not the case. We imagine there are probably tons of executives out there whose Blackberry devices are used for two things only: phone calls and emails. That said, it seems once you cross over to being an application buyer, the sky’s the limit when it comes to spending.

One final note about the survey is that the findings are self-reported and most people don’t do very well at estimating how much they’ve spent over a period of time. We could probably ask our readers a similar question and report our findings as “research” too.

Hmm, let’s do that:

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