We are all aware of the rapid growth both in number and capacity of the various App Stores. This trend started with the very successful Apple App Store for iPhone apps, and now it seems like almost every large operator, device vendor and content provider has one. This is well coupled with the exponential growth in the number of sold high-end devices, as we wrote here yesterday. This is generating a large industry of application developers, all aiming to reach the top-pick lists in the application stores. The applications are becoming more sophisticated, using the latest and greatest device functionalities: touch screen, movement sensors, various types of network access types, etc.
New analysis from Frost & Sullivan (http://www.wireless.frost.com), An Insight into the U.S. Smartphone Application Storefront Market, finds that smartphone downloads from all app stores will reach 6.67 billion in 2014. The market segments covered in this research include prepaid and postpaid mobile, SMS and MMS, mobile Internet, iPhone, Android, Windows Mobile, Palm, and Symbian.
“Next-generation devices are being introduced at a rapid pace, and stakeholders are offering app stores to facilitate downloads of compelling applications from multiple categories, serving a wide range of communication, entertainment, information, and personalization requirements of the mobile user,” says Frost & Sullivan Industry Analyst Vikrant Gandhi. “For example, Apple, Google, Nokia, Palm, and Microsoft have either already introduced app stores or are in various stages of app store rollouts and are working to ensure that the entire service experience is compelling for the end user or device owner.”
The most significant challenge, according to this report, is to ensure service differentiation and optimal management of the scale of the app store business. They indicate, and I completely agree, that “App store providers should always be open to support new business models to drive the introduction of innovative services and content types. Having a clear value proposition is also important for mobile operators.”
“Unless the app store providers establish exclusivity agreements with application developers – something that is not feasible for a large majority of applications – it will be difficult to provide enough differentiation through the app stores,” notes Gandhi. “The best example of how this could be done is Apple’s app store, in which the entire experience of service purchase and consumption – including device characteristics, form factor and the operating environment – was a radical shift at the time of its introduction.”
Another important issue that is raised is how to create a differentiation between the various App Stores. While App Stores for specific devices have their special flavor, the more general storefronts, like those of the mobile carriers, may become just more of the same.
One more issue is the discovery of the applications. A recent survey that was published by AdMob indicates that 62% of the participants in the survey searched for a specific app, 60% looked through the lists of top selling apps in the store and 46% of all iPhone users rely on recommendations from friends. The survey also indicates that 32% of the responders download 1-3 apps per month, while 30% download 4-6 applications per month.
This flood of applications and app stores, is likely to create a very few top apps, and a long long tail of applications that may hardly be used.
