App-Store Mobile Downloads to Reach $6.2B by 2010

Global consumers are expected to spend $6.2 billion at mobile application stores in 2010, while related advertising revenue will generate $0.6 billion worldwide, according to Gartner, Inc.

Mobile app stores will exceed 4.5 billion downloads in 2010, 8 out of 10 of which will be free to end users, Gartner analysts said.

Worldwide downloads in mobile application stores will surpass 21.6 billion by 2013 and will generate more than $29 billion in revenue.

“As smartphones grow in popularity and application stores become the focus for several players in the value chain, more consumers will experiment with application downloads,” said Stephanie Baghdassarian, research director at Gartner. “Games remain the #1 application, and mobile shopping, social networking, utilities and productivity tools continue to grow and attract increasing amounts of money.”

Free Apps Dominate

Free downloads will account for 82% of all downloads in 2010, and will account for 87% of downloads by 2013. Free applications have value because the developer charges for other things within the application. There are also applications that are free to use but that charge for physical goods delivered through the application. Others derive their revenue from advertising. This is done with banners as well as full-page advertising such as that between game levels in game apps.

Significant Growth by 2013

Worldwide mobile application stores’ download revenue exceeded $4.2 billion in 2009 and will grow to $29.5 billion by the end of 2013. This revenue forecast includes end-user spending on paid-for applications and advertising-sponsored free applications. Ad-sponsored mobile applications will generate almost 25% of mobile application stores revenue by 2013, the study said.

Though high-end smartphone owners are currently the biggest downloaders of mobile apps, sales of smartphones are expected to pick up among average users as well - though they will not necessarily download as many apps. “Growth in smartphone sales will not necessarily mean that consumers will spend more money, but it will widen the addressable market for an offering that will be advertising-funded,” Baghdassarian said. “The value chain of the application stores will evolve as rules are set and broken in an attempt to find the most profitable business model for all parties involved.”

Platform Shakeout

Though there are currently a number competing app platforms available -  including iPhone and Android - the market may be headed for a shakeout. “Application stores will be a core focus throughout 2010 for the mobile industry and applications themselves will help determine the winner among mobile devices platforms,” said Carolina Milanesi, research director at Gartner. “Consumers will have a wide choice of stores and will seek the ones that make it easy for them to discover applications they are interested in and make it easy to pay for them when they have to. Developers will have to consider carefully not only which platform to support but also which store to promote their applications in.”

A separate survey by PlayHaven and Mobclix reaffirms the growth in the mobile apps market.  It found that iPhone and iTouch app downloads in 2009 were roughly 28 times higher during the week between Christmas and New Year’s, compared with downloads in 2008.

About the report: Additional information about the study is available in the “Dataquest Insight: Application Stores; The Revenue Opportunity Beyond the Hype,” report, which is available for purchase from Gartner.