Consumers to spend $6.2-billion in mobile apps in 2010, says report

By MELVIN G. CALIMAG
February 6, 2010, 5:09pm

Apple and other makers of smartphones are likely to welcome the results of a new research report indicating that consumers will spend $6.2 billion in 2010 in mobile application stores.

Analyst firm Gartner said mobile application stores will exceed 4.5 billion downloads in 2010, eight out of ten of which will be free to end-users. Advertising revenue is also expected to generate $0.6 billion worldwide, according to Gartner.

The research firm forecast worldwide downloads in mobile application stores to surpass 21.6 billion by 2013. Free downloads will account for 82 percent of all downloads in 2010, and will account for 87 percent of downloads in 2013, it said.

“As smartphones grow in popularity and application stores become the focus for several players in the value chain, more consumers will experiment with application downloads,” Stephanie Baghdassarian, research director at Gartner, said in press statement.

“Games remain the No. 1 application, and mobile shopping, social networking, utilities and productivity tools continue to grow and attract increasing amounts of money,” she said.

An application can be free because the developer is offering it at no cost to the consumer while charging for other things within the application. There are also applications that are free to use but that charge for physical goods that you can have delivered through the application, Gartner noted.

There are many applications that are free to users and derive their revenue from advertising. This can be done with banners as well as full page advertising between game levels for instance, the research firm observed.

Worldwide mobile application stores’ download revenue exceeded $4.2 billion in 2009 and will grow to $29.5 billion by the end of 2013, Gartner said. This revenue forecast includes end-user spending on paid-for applications and advertising-sponsored free applications. Advertising-sponsored mobile applications will generate almost 25 percent of mobile application stores revenue by 2013, it added.

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

“Growth in smartphone sales will not necessarily mean that consumers will spend more money, but it will widen the addressable market for an offering that will be advertising-funded,” Baghdassarian added.

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