Revenues of global mobile app stores to exceed $15 B

MANILA, Philippines - Have you bought a mobile app for your smartphone lately? If yes, you are one of the millions of people worldwide who are helping buoy revenues of mobile application stores.

Research firm Gartner Inc. forecasts that worldwide revenue of mobile application stores would surpass $15.1 billion this year, both from end-users buying applications as well as the applications themselves generating advertising revenues for their developers. This figure reflects a 190 percent increase from the 2010 revenue of $5.2 billion, Gartner said.

Gartner also foresees mobile application stores worldwide collectively attracting 17.7 billion downloads this year, a 117 percent increase from an estimated 8.2 billion downloads in 2010.

Gartner analysts believe the healthy buying trend being experienced by application stores is not a fleeting fad, especially now that the number of players is growing. The most popular are Apple App Store, Android Market, Nokia’s Ovi Store, Research In Motion’s App World, Microsoft’s Marketplace, and Samsung Apps.

Free downloads are forecast to account for 81 percent of total downloads from mobile application stores in 2011. However, Gartner believes free downloads are actually on a decline now as users find more value in the concept of mobile applications, and they become more trustful of billing mechanisms.

“While the average number of downloads per device onto a smartphone will remain stable as the market grows, it must be assumed that media tablets will drive more downloads from consumers, boosting the overall average downloads per device,” said Carolina Milanesi, research vice president at Gartner.

“We estimate that Apple’s App Store drove close to nine application downloads out of 10 in 2010 and will remain the single best-selling store across our forecast period (through 2014), although to a lesser extent, as other stores manage to gain momentum,” Milanesi added.

Application stores’ revenue is split between the store owner (such as Apple, in the case of the App Store, or RIM, in the case of App World) and the application’s developer. The average revenue share is based on a 70/30 split, with 70 percent going to the developer. By the end of 2014, advertising will be generating a little under a third of the revenue generated by application stores, up from 16 percent in 2010, Gartner said.

In three years, Gartner forecasts over 185 billion applications will have been downloaded from mobile app stores, since the launch of the first one in July 2008.

But for that to happen, Gartner’s research director Stephanie Baghdassarian said applications “will have to grow up and deliver a superior experience to the one that a Web-based app will be able to deliver. Native apps will survive the Web enhancements only when they will provide a more-personal and richer experience to the ‘vanilla’ experience that a Web-based app will deliver.”

Gartner’s forecasts only covered application stores that have a storefront accessible directly from a mobile device, without having to go onto the Web and entering a Web address.

On the revenue forecast for mobile application stores, Gartner considered only the revenue generated by applications, excluding other types of content, such as ringtones and wallpapers.