Mobile Apps Business is Booming...for Apple

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Mobile apps had a banner year in 2009--with more than 2.5 billion apps downloaded and revenue of more than $4.2 billion. There are a number of newcomers to the app store arena, but app store pioneer Apple has a virtual monopoly right now with 99.4 percent of the app store market.

Apple has nearly 100 percent of the lucrative app store market
Gartner predicts that the app market will reach nearly $30 billion in revenue by 2013. Based on the current app store landscape, that is great news for Apple. It seems reasonable to expect some leveling or saturating of the iPhone app market over the next three years, though, and a rise in competing app stores.

Apple has over 150,000 apps available, and claims to receive more than 10,000 new app submissions each week. The Apple App Store has already surpassed the three billion served mark, and estimates project that it will have more than 300,000 apps by the end of 2010.

In 2009, Google, Palm, RIM, and Microsoft all introduced app store competitors. Samsung developed a whole new mobile operating system basically just so it could get into the app store market, and even non-smartphone competitors like Intel have latched on to the app store concept.

Many of the app stores may falter and fade away, but Google's Android Market seems prepared to battle Apple for the long haul. The Android Market has already built an impressive library of apps--with more than 20,000 apps and rising. Other app stores like RIM and Microsoft probably won't fade away any time soon, but also don't seem poised to offer any real competition to either Apple or Google.

Developers can't ignore the popularity or dominance of the iPhone platform, but as Android establishes itself as a solid competitor for the iPhone among smartphone operating systems, more developers will see the platform as a viable source of revenue and create apps for Android Market.

As smartphones replace feature phones as the mainstream standard for portable communications devices, average users may be less likely than the tech savvy early adopters to spend money filling their phones with apps. However, that just increases the growth potential for ad-supported apps and could benefit both Google and Apple as a result of recent acquisitions that put them both in the mobile ad business.

On the other end of the spectrum, though, there is also room for more expensive apps. While the vast majority of the hundreds of thousands of apps available retail for less than five dollars, apps that deliver specialized content or functionality provide value for users and not only justify the higher price, but may even be a bargain.

The addition of Intel's app store--focused on apps for Atom-based netbooks--represents a broader market for apps, and is also indicative of the blurred lines between smartphones and ever-shrinking computer platforms.

For developers, apps represent an exponential growth opportunity. For businesses, apps provide a virtually endless array of features and functions--usually for only a couple dollars. When it comes to software, there is much less risk in testing out a $2 app than a $50 software package.

Suffice it to say that with a market of nearly $30 billion on the horizon, there will be an app for that.

Tony Bradley tweets as @Tony_BradleyPCW, and can be contacted at his Facebook page.

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