Mobile App Revenues Buck Slowing Demand for Smartphones

While the smartphone market may not be expanding as fast as in years past, mobile app sales will continue to grow, predicts IDC.

IDC has some good news for mobile app developers who are concerned about slipping iPhone sales. Users will still snap up apps by the billions, at least for the next several years.

The analyst firm predicts that the mobile apps market will continue to expand, generating $57 billion in direct, non-advertising sales in 2020. In total, IDC expects users to install over 210 billion mobile apps that year.

Last year, mobile users installed an estimated 156 billion mobile apps. Mobile app sales reached $34.2 billion. Those sky-high figures will someday fall back to earth, and the first signs will present themselves during the forecast period.

As 2020 approaches, mobile app installs will drop into the single-digit compound annual growth rate (CAGR) category as the market matures. Over five years, the industry can expect an installed mobile app CAGR of 6.3 percent. Direct revenues are also expected to slow but still notch a 10.6 percent CAGR over five years.

Apple's App Store beat Google Play in terms of direct app revenue last year. Apple captured 58 percent of worldwide mobile app sales while Google took home 36 percent. IDC expects Apple to continue to outperform its rival, but notes that "both ecosystems are more than sufficiently established to sustainably attract developers."

Sales and install numbers are good gauges of an app's popularity, but IDC cautions that the mobile app market is undergoing a profound shift.

Mobile app developers may need to start focusing on more than just landing on an app store's top sellers lists, according to John Jackson, research vice president of IDC Mobile and Connected Platforms. For a clue on where the market is heading, it pays to analyze the moves being made by some of the biggest names in mobile experiences.

"Facebook and Google continue to dominate mobile ad spending thanks to the scale and sophistication of their network effects, with Facebook's moves to incorporate news and other interests into its experience will likely pull traffic and install volumes away from discreet apps," said Jackson in a statement. "Similarly, the emergence of 'bots', which seek to automate interactions in a contextually infused way, are another in a series of examples of value being created above the OS layer and even above the app."

Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.

Tags: smartphones, IDC, mobile app

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