App stores’ direct revenue to exceed $14 billion next year

Canalys announced that app store direct revenue from the
sale of apps, in-app purchases and subscriptions across smart phones and pads
combined will hit $14.1 billion next year, up 92 percent from an expected $7.3
billion in 2011, and will reach $36.7 billion by 2015.


This equates to a four-year compound annual growth rate
for 2011 to 2015 of just under 50 percent. According to the analyst firm, this
projected revenue growth presents an excellent opportunity for mobile network
operators (MNOs) to compete with vendor app stores. MNOs have a strong platform
on which to offer an improved customer experience, leveraging their detailed
subscriber data.


The leading stores already have hundreds of thousands of
apps, so it’s hard for operators to compete with those numbers.On the other
hand, too much choice brings serious problems in terms of application discovery
for both developers and users, which operators can turn to their advantage,”
said Tim Shepherd, analyst, Canalys.


According to Canalys, large app inventories pose a
problem for consumers who face overwhelming choice when it comes to the most
popular app categories.


A consumer searching for a weather app in the Android
Market, for example, will find numerous possibilities, many of which have not
yet received any user ratings or reviews. This gives operators an opening to
provide an improved customer experience, by offering a narrower, yet fully
vetted, choice of apps that can be tailored by user preference.


Consumer behavior is driving a major shift in the mobile
space, as end-user appreciation of the convenience of connected mobile apps and
web services grows. Consumers typically take their mobile devices everywhere,
opening new market opportunities for time- and location-specific services.


With 419.0 million application-addressable smart phones
and 43.3 million pads expected to ship worldwide this year alone, the market
opportunity for apps is still growing rapidly. But for operators, there are
other advantages to having a branded app store offering beyond direct revenue.
For example, they can actively build consumer experiences that bolster customer


A vibrant app ecosystem could lure new customers, while
helping operators upsell current customers to higher-end smart phones and
larger data contracts, and could even encourage pre-pay customers to consider
post-pay contracts.


By Team

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