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Upside for Mobile Phone Application Stores

The number of smartphones sold each year will increase from around 165.2 million in 2009 to 422.96 million in 2013, with the total number of smartphone users approaching 1.6 billion, according to the latest market study by Wireless Expertise.

Their latest report demonstrates how smartphone penetration will reach approximately 28-30 percent of the total mobile market by 2013.

"We expect smartphone growth to have a positive impact on the number of application downloads in the short- to mid-term," said Anuj Khanna, CEO of Wireless Expertise and author of the report.

Strong revenues are expected to come from low-end mass market smartphones and mid-to high-end feature-phones in the mid- to long-term as operators and mobile handset manufacturers take app stores to the mass market.

Wireless Expertise forecasts that the global mobile app market will be worth $4.66 billion in 2009, rising to $16.60 billion, in 2013. With mobile phones outnumbering PCs around the world by 4:1, mobile applications represent an even bigger opportunity for the mobile industry.

"With over four billion mobile users around the world compared to approximately one billion PCs, mobile will become the ideal channel for businesses to reach their consumers," continued Khanna. "Mobile operators have to adopt a dual app store strategy, using the now widely-accepted app store model in conjunction with a browser-based widget store, to provide the greatest potential for a mass-market proposition."

The report points out that complacency from existing handset vendors and mobile operators had virtually killed the mobile content market. But mobile applications have reignited the demand for multimedia content and applications.

Wireless Expertise credits Apple for growing the applications market. "Apple has not only invigorated what was rapidly becoming a stagnant mobile content and services market, but its App Store has paved the way for professional content developers and publishers to stand side-by-side with the new breed of garage developers introducing innovative and functional apps," said Khanna.

However, they expect Apple to face tough competition from mobile operators, independent service providers and competing vendor application portals in the next 18-24 months.

The report suggests that Nokia will be very active in the smartphone market and Nokia's biggest advantage over Apple is its ability to offer Ovi on a wide range of handsets, ranging from the high-end to the mainstream. And the fact that Nokia is pushing its app store to a mass market is very encouraging.

Mobile operators releasing a mobile internet API would address the issue of fragmentation and help create a multichannel app services and content retail environment coupled with integrated billing and payment mechanisms.

However, operators must be involved in the delivery and payment of the service with their own platforms giving improved revenue shares as high as 90 percent if they want to compete in this market.

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