Mobile Commerce Daily is now Retail Dive: Mobile Commerce! Click here to learn more!

Mobile app store revenues will reach $6.2B in 2010: Gartner

In 2010, application stores will exceed 4.5 billion downloads and consumers will spend $6.2 billion in them, according to a Gartner Inc. forecast.

Encouraged by smartphone sales and Apple’s launch of the iPad, the application market will reach new heights this year. Gartner analysts have also predicted that advertising revenue will reach $600 million worldwide.

“The share of advertising revenue is increasing, though it will only be 25 percent of the app stores’ revenue by 2013,” said Stéphanie Baghdassarian, research director at Gartner, Egham, Britain.

“Considering the high level of interest for free applications, we would have originally expected advertising would drive more revenue,” she said.

Gartner is a worldwide information technology research and advisory company.

Application explosion
According to Gartner, eight out of 10 applications downloaded from application stores are free of charge. Of the total applications available, eight out of 10 are premium.

Worldwide downloads in mobile application stores are predicted to surpass 21.6 billion by 2013.

Free downloads will account for 82 percent of all downloads in 2010 and 87 percent of in 2013.

Games remain the No. 1 application, but Gartner is predicting that mobile shopping, social networking and productivity tools will continue to grow and attract higher revenues.

Mobile application stores’ worldwide download revenue exceeded $4.2 billion in 2009 and will grow to $29.5 billion by the end of 2013.

The research firm’s revenue forecast includes end-user spending on paid-for applications and advertising-sponsored free applications.

Gartner looked at all models of applications, such as those that the developer is offering at no cost to the consumer while charging for other things within the application.

There are also applications that are free to use but are monetized via charges for physical goods that you can have delivered through the application.

In addition, some applications are free to users and derive their revenue from advertising.

A new world for commerce
Ms. Baghdassarian said application stores are opening more opportunities to mobile advertising.

“For a brand/retailer addressing consumers through the Internet, they get the opportunity to port this to a mobile device and catch more users than through a mobile Web site, which is still perceived as hard to navigate and unreliable as far as connection goes,” Ms. Baghdassarian said.

High-end smartphone users tend to be early adopters of mobile applications and more trustful of billing mechanisms, so they will pay for applications that meet their needs.

Gartner found that average smartphone users will become less tech-savvy as smartphones come down in price to have a mass-market appeal and these users will be more reluctant to pay for applications.

“As smartphones address a wider market and grow in popularity, it gives the opportunity to try mobile applications to more people and this is bound to drive traffic,” Ms. Baghdassarian said. “Also app stores make accessing mobile applications more easily and user-friendly therefore more people are tempted to try them.

“The fact that a lot of applications are free is also a trigger to get users started,” she said.