Consumers are increasingly turning to recommendation engines, friends, social networking or advertising to discover mobile applications rather than sorting through the thousands of mobile apps available. As a consequence, Gartner, Inc. (http://www.gartner.com) predicts that through 2018, less than 0.01 percent of consumer mobile apps will be considered a financial success by their developers.
“The vast number of mobile apps may imply that mobile is a new revenue stream that will bring riches to many,” said Ken Dulaney, vice president and distinguished analyst at Gartner. “However, our analysis shows that most mobile applications are not generating profits and that many mobile apps are not designed to generate revenue, but rather are used to build brand recognition and product awareness or are just for fun. Application designers who do not recognize this may find profits elusive.”
He described the mobile application market as “hyperactive” with more than 200 vendors developing mobile application development platforms and millions of developers using these products and open-source tools to build mobile applications. In addition, the bounty of good, free mobile apps has set high expectations for what should be paid for.
There are so many applications that are free and that will never directly generate revenue. Gartner is forecasting that, by 2017, 94.5%of downloads will be for free apps.
Furthermore, of paid applications, about 90% are downloaded less than 500 times per day and make less than US$1,250 a day,” Dulaney said. “This is only going to get worse in the future when there will be even greater competition, especially in successful markets.”