Increasing Profits for the Smartphone Industry

The impact and popularity that technology has had on the everyday lives of consumers has led to soaring profits for smartphone and tablet developers around the world.

Nowadays, individuals of all ages have access to a host of games, communication methods and social media websites at their fingertips. And not only that, apps are downloaded to fulfil a wide range of requirements – from helping users to keep fit to improving their productivity at work.

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The extent to which these features have changed everyday life for consumers may lead many to believe there is very little scope left for developers to launch new and innovative apps. However, this is not the case – and the market is set for big things in the coming months and years.

The Rise of App Store Downloads

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According to new data released by Gartner, mobile app stores are expected to see downloads reach 30 billion this year alone, representing a significant increase from 25 billion in 2015.

The surge in popularity of mobile apps is set to lead to soaring profits for developers, with total revenue expected to reach $52 billion for companies operating within the industry – up from the $18 billion recorded in 2012.

The Impact of Free Apps

Analysts said free apps will account for 91 per cent of total downloads in 2017, while in-app purchases – when the features are downloaded for free, but charge users for extras – will account for 48 per cent of revenue by 2017.

There is a growing trend of making purchases in app, treat a friend with a tailored gift and get them a gift card for the app store so that they can continue enjoying their apps.

In-app purchases are expected to have strong growth in 2013 and next year, before slowing down later on due to the wider availability of mobile technology for mass-market consumers. Researchers suggested that members of the mass-market are less likely to pay for extras than early adopters.

Commenting on the statistics, Sandy Shen – research director at Gartner – said strong growth in downloads is expected throughout next year. However, growth is expected to slow down later on.

smartphone app themed casesHe explained: “The average downloads per device should be high in early years as users get new devices and discover the apps they like. Over time they accumulate a portfolio of apps they like and stick to, so there will be moderate numbers of downloads in the later years.”

This sentiment was echoed by Brian Blau – another research director at Gartner – who predicted that average monthly downloads per Apple device will decline from 4.9 in 2013 to 3.9 in 2017, while Android users will download an average of 5.8 apps per month in 2017 – down from 6.2 this year.

He added: “This relates back to the overall trend of users using the same apps more often rather than downloading new ones.”

Although rates are expected to decline, Gartner suggested that in-app purchasing is a “promising and sustainable monetisation method” because it encourages consumers to pay only when they are happy with the experience.

The analyst said: “Users only pay when they are happy with the experience, and developers have to work hard to earn the revenue through good design and performance.”