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Monday, May 17, 2010

Mobile App Stores Experience Transient Upside

Mobile phone software applications have helped to stimulate new user demand for smartphones. Today most mobile applications are downloaded from app stores. According to the latest market study by ABI Research, last year consumers downloaded some 2.4 billion applications from such online stores.

The download rate is forecast to accelerate over the next few years until in 2013 smartphone downloads are expected to peak -- at just below seven billion. Apple's app store will likely continue to lead the market.

That will be the high point, however, and in the years that follow, smartphone download rates from app stores will start a slow decline -- although total downloads from all sources will probably continue to grow.

According to ABI senior analyst Mark Beccue, "App stores aren't going away -- following the 2013 peak in demand, the number of downloads in 2015 will have decreased only seven or eight percent. But as our use of the mobile Internet evolves, demand will increasingly shift elsewhere."

Why? The mobile web is getting more and more sophisticated, says Beccue, so that more subscribers will use the functionality on mobile websites themselves rather than dedicated apps.

"We see two emerging trends. First, many applications (increasingly built on web standards) will migrate from app stores to regular websites, and for some sites you won't need an app at all. In addition, more and more popular applications will be preloaded on mobile devices. Social networking apps in particular will be pre-loaded on new products."

This discussion has centered on smartphones and other high-end devices that allow optimized mobile web experiences, which effectively means that we're talking about mature markets.

However another development may change that -- mobile network operators (MNOs) will increasingly launch their own app stores, and these outlets may extend the principle of downloadable apps to feature phones, which means access to many newer and developing markets where smartphone penetration is lower.