Apple and Android's (News - Alert) mobile app stores will account for 78 percent of all mobile app store downloads this year, with Apple getting 52 percent share of app downloads, according to ABI Research (News - Alert).
Revenues from mobile app sales continue their decline, as high competition leads to a “race to the bottom” in terms of app pricing, ABI Research says. That fact points up the importance of advertising as a key building block for the mobile app ecosystem.
If mobile app stores are as important as many believe they are, and if most downloads are of free apps, while average paid download prices are declining, advertising revenue will be a key part of the business model, as it is for most media businesses.
Full-featured games are available from between $.99 and $5, and many popular applications are adopting ad-supported models, ABI Research says.
Application store owners such as Google, Apple (News - Alert), and mobile operators will continue to support low-priced and free applications because they help market and sell their devices. But making money will become a difficult proposition in a market that is expected to peak in 2011, with annual sales of just under $8 billion.
You might wonder why ABI researchers expect the market to top next year. Part of the reason for that view is that native Web apps are proliferating, and represent an alternate way for mobile users to get the value of apps without having to use a mobile app. Also, declining average prices will depress top-line revenue as well.
Also, many apps are moving to free distribution and relying on ad support.
The forecast ought to chasten most other mobile app initiatives, whether that is app stores devoted to rival mobile operating systems, mobile operator consortiums or discrete handset manufacturer sites.
To the extent the app store richness is a meaningful part of the value proposition for any handset, Android and iOS devices (Apple) will be formidable contestants. Just about everybody else, with a couple of exceptions, such as GetJar, will face a tough job. Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.
Edited by Stefania Viscusi