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Thursday, December 06, 2012

Mobile Apps Market Reaches the $30B Milestone

As 2012 comes to a close, revenues accumulated by the global mobile application (app) market will pass the $30 billion milestone by the end of this year, according to the latest market study by ABI Research.

The cumulative revenue base includes the income from pay-per-downloads, in-app purchases, subscriptions, and in-app advertisements. Furthermore, it's nearly double the amount that had been reached by the end of 2011.

"Consumer's high interest in apps has for a long time been obvious from download volumes, but it's 2012 that will go down in history as the year when the economic side of the business finally took off. We're no longer talking only about a short-term gold rush. Apps have become a major digital industry," said Aapo Markkanen, senior analyst at ABI Research.

The catalyst behind turning mobile apps into meaningful revenue has been Apple, which created a restrictive "walled garden" operating system (iOS) model that forced mobile network service providers to comply with their demanding terms -- plus a well-executed marketing, distribution and billing approach.

But the company that has been most creative and disruptive in 2012 would be Google, with it's Android OS ecosystem and associated business model that was eagerly embraced by both the jaded network operators and independent app developers.

Markkanen added, "Google deserves a lot of credit for rehabilitating its proposition as an app distributor in the past year or so. If the old Android Market was a garage sale of the industry then the new Google Play has begun resembling a respectable department store."

ABI now estimates that the Android developer's share of the annual app revenues to have reached around one-third of the total market -- with more forward-looking growth on the horizon.

Meanwhile, the main candidates for the distant third mobile OS ecosystem -- Microsoft and RIM -- have clearly made the app monetization aspect a key component of their aspirational platform strategies. But their immediate challenges are very significant.

Success would require that if and when Windows Phone 8 or BlackBerry 10 can manage to attain a sizable number of smartphone users, then the adoption threshold for independent app developers won't be so high -- as it is today. Granted, that's a huge hurdle to overcome.

These key findings are from the ABI Research mobile application market assessment. Their research service focuses on the distribution and the economics of mobile apps, providing data-driven insights on areas such as download volumes, revenues and business models, as well as trends within different applications categories.