GetJar Reveals That Mobile Apps Will Outsell CDs by 2012

Study by Chetan Sharma Consulting Finds That the Apps Economy Will Be Worth $17.5bn in Two Years’ Time

SAN MATEO, Calif. & LONDON--(BUSINESS WIRE)--The global mobile apps economy is set to be worth $17.5billion by 2012, according to an independent report commissioned by GetJar, the world’s second largest app store. Mobile app downloads across all types of handset are also expected to increase from over 7 billion downloads in 2009 to almost 50 billion in 2012 – a year on year growth rate of 92%.

This would mean that the value of apps sold would be greater than the value of CDs sold in 2012 ($13.83bn)¹.

To understand the potential of the “global mobile apps economy,” GetJar commissioned independent consulting firm Chetan Sharma Consulting to lift the lid on the rapidly expanding global apps market. The aim of the project was to analyse the potential and real value of the mobile apps market worldwide, using first hand data.

It is clear that by 2012, off-deck paid-for apps will be the biggest revenue generator, accounting for almost 50 per cent of all apps revenue. By comparison, in 2009, on-deck apps available from mobile operators accounted for over 60% of all apps revenue, but this will fall significantly to just under 23% by 2012.

The study outlines opportunities for both high end smart phones (such as BlackBerry and Android powered handsets) and feature phones² (such as the Samsung Instinct/Jet and Nokia X6). In 2009, 90% of handsets in use worldwide were so-called feature phones, while smart phones and data cards accounted for the remaining 10% of the market. In some regions such as North America, uptake of smart phones was much higher (over 20%) than other regions (3% in Middle East/Africa). The line between powerful feature phones and smart phones is blurring as consumers demand powerful yet cost effective devices – effectively expanding the apps revenue opportunity across a much broader range of handsets.

Apps economies are evolving differently worldwide, suggesting a need for greater focus on developing different apps business models – as opposed to a “one size fits all” approach. For instance, the average app selling price (ASP) in North America was $1.09, significantly higher compared to ASPs in developing markets such as South America ($0.20) and Asia ($0.10). At the same time, post 2012, app downloads in developing regions such as Asia may eventually exceed those in Western regions although monetisation of these downloads will require different business models (advertising, virtual currency) than those seen in developed markets.

The revenue opportunities in Europe are set to soar from $1.5billion in 2009 to $8.5billion in 2012, while in North America the figure will rise from around $2.1billion to around $6.7billion in 2012. Currently apps are most popular in Asia, with the region accounting for 37% of global downloads in 2009. However, while Asia had the highest number of downloads, users in North America spent the most money on apps, accounting for over 50% of revenue.

Other findings from the research include:

• Advertising based revenue models have become increasingly popular. In 2009, advertising contributed almost 12% of the overall apps revenue. However, this share is expected to more than double to over 28% by 2012 – given the high proportion of prepay users in developing markets.
• The battle of the app stores is well underway - in 2009 the number of app stores leapt from eight to 38 – an increase of 375%. The number of app stores is expected to further increase in 2010.
• The price of mobile applications can vary from $0.99 to $999, however the average selling price in 2009 was approximately $1.9. This is predicted to decrease by 29% over the next three years, although advertising revenue derived from apps is likely to stay relatively flat.

Ilja Laurs, CEO and founder, GetJar comments: “With the consumer appetite for mobile apps rocketing, the opportunities for developers are huge. This report signifies a battle for survival of the fittest among app stores worldwide – with app revenue and growth opportunities growing significantly. There is no way that this many app stores will survive in the long term and while the value of the global app economy is set to be astoundingly high by 2012, we think only a few app stores will share this revenue.”

Chetan Sharma, President, Chetan Sharma Consulting, comments: “The app ecosystem is adjusting across multiple dimensions and thus expanding the revenue opportunities. The growth in the quality of mobile advertising is also opening up new revenue streams for developers. As the number of active data subscribers grows, we will continue to see the proliferation of apps in many directions on different device types.”

The goal of the research study was to quantify the global mobile apps market by taking a truly holistic view from specific data in the market. To build an effective framework for analysis, Chetan Sharma Consulting built a grounds-up model that took into account how the overall apps consumption is evolving across all dimensions – on-deck (offered on carrier deck), offdeck (outside the carrier deck or offering though they still might play a role like in billing or marketing), smartphones, featurephones, paid, free, advertising based, and virtual goods based.

The model focused on apps consumption by five major regions: North America, Europe, South America, Asia, and Middle East and Africa.

For further information, or to request a copy of the report please contact:

UK/Europe
Simon Burberry/Jayne Stala
Komodo PR
[phone]
[e-mail]

US
Candace Locklear, SparkPR for GetJar
[phone]
[e-mail]

About GetJar

GetJar is the world’s second largest Apps store, second only to Apple iTunes, with over 800 million downloads to date. The company provides more than 60,000 mobile applications across all major handsets and platforms to consumers in more than 200 countries. In June 2009, GetJar was named winner of the 2009 Meffy Award for Best Direct to Consumer Service. GetJar is backed by marquee investors Accel Partners and is headquartered in Silicon Valley with offices in the UK and Lithuania. For more information: www.getjar.com and follow us on Twitter @getjar.

¹ According to world music trade body IFPI April 2009. For more information, click here.

² GetJar’s definition of a smartphone is a phone that runs on a native operating system. Phones such as the Samsung Jet or Instinct are becoming a significant revenue opportunity, even though they are primarily considered to be feature phones with smart phone capabilities.

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