A gold rush for iPhone and other smartphone application developers is in the works, with U.S. revenues from smartphone apps expected to increase more than 10 times through 2013, to $4.2 billion.
That estimate of growth, made by research firm Yankee Group in Boston, is based on the projected growth in the number of smartphones sold, which will quadruple between now and 2013, an increase in the number of smartphone applications, and a projected jump in the average selling price of a paid app to $2.37, up from $1.95 today. During the same 2009 to 2013 period, the number of smartphones sold is expected to quadruple from 40 million in 2009 to 160 million in 2013, Yankee said.
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For developers to cash in on the potential gold mine, Yankee Group recommended writing applications that most other developers are not. That means, for example, focusing less on games for the iPhone App Store, which has plenty of games, and more on software for professionals, which are available in smaller numbers.
For BlackBerry smartphones, game developers should try to write apps, since there are plenty of office and business apps for that platform. "BlackBerry already has so much software for business, so there's a real opportunity for consumer apps," said Carl Howe, an analyst at Yankee Group, in an interview.
Likewise, Apple lists 75,000 applications in its App Store, and most are consumer-focused, Howe noted. "If you are trying to hit the top 25 paid apps on App Store with the next cool game, there are probably 1,000 developers out there that want to also. So, I'd say to go where everybody else isn't. App Store has a bunch of business apps, buy not nearly as much as consumer."
Yankee Group based its analysis of purchased applications on a survey of 1,200 consumer smartphone owners. Howe said he was most surprised by one finding that the average user has downloaded 20 applications. Games overwhelmingly led the list of downloaded appls, comprising 73 percent of the total. Apps for search came second, and social networking apps were third. After that, users said they picked applications to help with specific interests, such as bird watching, followed by banking apps, which were fifth.
"I'm surprised by the sheer number of apps now being downloaded," Howe said.
Only 18 percent of the applications across all of the various apps stores were paid for, but Howe said there is still a healthy revenue stream from that paid group. In all of 2009, Yankee estimates there will be $343 million in U.S. revenues for applications for smartphones from application stores, a number expected to exceed $1 billion in 2011 and to reach more than $4.2 billion in 2013.
About $2.9 billion of that $4.2 billion will go into the hands of developers, while $1.3 billion will go to the companies running the app stores, such as Apple Inc., Research in Motion Ltd. for its BlackBerry App World, Android's App Market and Nokia's Ovi Store.