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Global mobile statistics 2013 Section E: Mobile apps, app stores, pricing and failure rates

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Posted by mobiThinking - 26 May 2013
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FINDING YOUR WAY AROUND THE MOBILE STATS COMPENDIUM:

Home: Full index of contents and highlights • Section A: Mobile subscribers; handset share • Section B: Mobile Web; 3G • Section C: Mobile marketing, advertising and messaging • Section D: Consumer mobile behavior • Section E: Mobile apps, app stores • Section F: Mobile payment, NFC, m-commerce, m-ticketing and m-coupons • Section G: Mobile financial services (MFS) and m-banking • Section H: VC investment in mobile.

SECTION E: Mobile apps, app stores, pricing and failure rates

1) How many people use apps? (NEW)
2) Do smartphone users use apps more than mobile Web or SMS? (NEW).
3) How many mobile apps are there? (NEW)
4) How many mobile apps are downloaded each year? (NEW).
5) How much revenue do/will apps generate? (NEW) • Who’s making money?Who’s losing money? (NEW)
6) How do you make money from apps? (NEW)
7) How many app stores are there?What’s the largest? (NEW) • What’s the best? (NEW)
8) What type of apps are most popular/abundant? (NEW)
9) Which apps are most used? (NEW)
10) How many apps fail? (How many are downloaded, tried and deleted?)
11) Is a mobile app a substitute for a mobile Website/mobile-optimized Website? (NEW)
12) How many businesses use/will use enterprise (private) app stores? (NEW)

1) How many people use apps?

Portio Research (March 2013) estimates: 1.2 billion people worldwide were using mobile apps at the end of 2012. This is forecast to grow at a 29.8 percent each year, to reach 4.4 billion users by the end of 2017. Much of this growth will come from Asia, which will account for almost half of app users in 2017.
mobiThinking note: 1.2 billion apps users is a large number, considering that analysts estimate that there aren’t much more than a billion smartphones worldwide, and that apps development in recent years has largely focused on smartphones (mostly just one or two types of smartphones), but it is still only a minority of phone users. There are 6.8 billion mobile subscriptions worldwide, according to the ITU (February 2013) – that means approximately 17 percent of mobile subscribers use apps.

Users of mobile apps worldwide by region 2012-2017 according to Portio Research
  2012 2013 2017
App users worldwide 1.2 billion N/A 4.4 billion
Asia Pacific 30% 32% 47%
Europe 29% 28% 21%
North America 18% 17% 10%
Middle East & Africa 14% 13% 12%
Latin America 9% 10% 10%
Source: © Portio Research (March 2013) via: © mobiThinking

2) Do smartphone users use apps more than mobile Web or SMS?

In most countries apps are popular with smartphone users, but not as popular as SMS or mobile Web. N.B. This Nielsen report just studies smartphone users; if it included feature phones, apps usage would be much lower, because the majority of app developers only focus on the smartphone market (often only one or two types of smartphone), ignoring the much larger feature phone market.
Nielsen Mobile Consumer Report (February 2013): In all 10 countries surveyed, smartphone vendors use SMS more than apps (despite the hype around messaging apps). Results suggest that in Brazil and Italy, smartphone users prefer apps to mobile Web; in Australia, India, South Korea and Turkey, app and Web usage is comparable; in China, Russia and UK mobile Web is preferred to apps; and in the US, mobile Web is much more popular than apps (20 percent higher).
• N.B. Mobile apps and mobile Websites are two entirely different things and serve different markets, but there is sometimes confusion among people who are new to mobile. See section 11: Is a mobile app a substitute for a mobile Website/mobile-optimized Website?


Activities performed by smartphone users at least once a month, according to Nielsen
  SMS Web
browsing
Email Social
networking
Apps Streaming
music
Instant
messaging
Video/
mobile TV
Australia 94% 60% 55% 58% 59% 21% 33% 19%
Brazil 85% 69% 66% 75% 74% 39% 57% 43%
China 84% 75% 58% 62% 71% 59% 67% 39%
India 45% 15% 17% 26% 13% 11% 15% 8%
Italy 89% 37% 51% 47% 49% 26% 35% 17%
Russia 95% 68% 55% 59% 64% 41% 34% 36%
South Korea 93% 80% 52% 55% 81% 40% 70% 44%
Turkey 78% 37% 33% 69% 38% 22% 50% 9%
UK 92% 66% 68% 63% 56% 20% 37% 19%
US 86% 82% 75% 63% 62% 38% 28% 28%
Source: © Nielsen, (February 2013) via: © mobiThinking

2b) Do mobile app users spend more time connected than mobile Web users?

comScore (May 2013): Some of the largest mobile properties in the US – including Facebook, Google, Yahoo, Amazon, eBay – see app users spending considerably more time connected than mobile site users; others including Wikimedia, Microsoft and ESPN see the opposite.

2b) Do mobile users prefer mobile apps to mobile Web?

Research suggests that for activities such as shopping consumers prefer Web to apps:
Nielsen (February 2012): research found that retailer’s mobile sites are up to two times more popular over the Christmas shopping period than apps.
• A Google survey (April 2013): found that 65 percent of US smartphone shoppers preferred to use mobile Web to mobile apps for shopping.


3) How many mobile apps are there?

Numbers for total number of apps worldwide are hard to come by, but the Apple App Store (for apps that work on Apple devices) and Google Play (for apps that work on Android devices), are believed to be the two largest stores with over 800,000 apps apiece, according to Canalys. For more details, see: What are the largest app stores?.
• N.B. There are lots more app stores, than these two.



Searching for the right mobile agency to build your app or a mobile ad network to help promote or monetize your app?
• mobiThinking guide to mobile agencies
• mobiThinking guide to mobile ad networks


4) How many mobile apps are downloaded each year?

Analyst estimates for downloads of apps in 2013 range from 56 to 82 billion. In 2017, there could be 200 billion downloads.
ABI Research (March 2013) predicts: 56 billion smartphone apps will be downloaded in 2013. By operating system: 58 percent will be Google Android; 33 percent Apple iOS; 4 percent Microsoft Windows Phone; 3 percent BlackBerry.
• 14 billion tablet apps will be downloaded in 2013; 75 percent will be iOS apps; 21 percent Android; 2 percent Windows. Android includes Amazon Kindle Fire, which will account for 4 percent of downloads.
• “With its vast installed base and the generally improved conditions for app building, ABI Research expects a growing number of smartphone-focused developers to adopt an Android-first strategy within the year,” concludes ABI Research.
Portio Research (March 2013) forecasts: 82 billion apps will be downloaded worldwide in 2013, and by 2017 there will be more than 200 billion downloads per year.
mobiThinking note: Download stats should be taken with a pinch of salt. Remember, there’s no way for a user to try an app without downloading it. So an app’s download stats remain the same whether an app is used once and deleted (which is common, see below) or is used five times a day, every day, for a year. When app stores rank apps by number of downloads, rather than by user satisfaction/reviews or active users, it makes it harder for users to find the best apps for them – this is called “discoverability” in the trade – thus making it incredibly difficult for new apps to get noticed, unless the publisher has a fortune to spend on promoting their app through advertising.


Wot no downloads?

The insiders’ guide to mobile app promotion: top tips for marketing your app from industry experts.


5a) How much revenue do/will apps generate?

Analysts estimate that app revenues could be US$20-25 billion in 2013; this could triple by 2017; but app users are increasingly reluctant to pay for apps and the revenues are not equally distributed among app publishers.
Canalys (April 2012): in Q1 2013, there were 13.4 billion downloads, up 11 percent from Q4 2012, creating revenue of US$2.2 billion (that’s before app stores take their substantial cut of the proceeds) from paid-for apps, in-app purchases and subscriptions (up 9 percent from Q4 2012).
ABI Research (March 2013) expects: apps to generate revenues of $25 billion in 2013; $16.4 billion will come from smartphone apps and $8.8 billion from tablet apps. Of this $25 billion, 65 percent will come from Apple’s iOS ecosystem, 27 percent from Google’s Android, and the remaining 8 percent from the other mobile platforms.
• In 2018, app revenues will be worth $92 billion - at that point, tablet apps will be worth more than smartphone apps, forecasts ABI Research.
Portio Research (March 2013) estimates: full-year app revenues of $12 billion in 2012, forecasted to grow to $20.4 billion in 2013 and $63.5 billion in 2017.

5b) Who’s making money?

Increasingly the lion’s share of revenues go to fewer and fewer big publishers.
Canalys (December 2012): research in November 2012 in the US, discovered that 50 percent of app revenues are shared between just 25 developers. Of the top 25 grossing developers – for paid downloads and in-app purchases, all bar one (Pandora with its Pandora Radio app) are game developers, including Zynga, Electronic Arts, Disney, Kabam, Rovio, Glu, Gameloft and Storm8’s TeamLava.
• Games dominate top apps. Games account for 145/300 of top paid apps on Apple App Store and 116/300 on Google Play. Games account for 94/300 of top free apps on Apple App Store and 110/300 on Google Play.
• “Discoverability is a particular issue in the Apple App Store and in Google Play given the huge inventories they boast. With top game developers’ content so prevalent in the stores, it can be hard for other good-quality apps to get the attention they deserve,” warns Canalys.
Distimo (2012 Year in review, December 2012): a lot of app store revenue goes to a few apps. 10 percent of the revenue in Google Play and Apple App Store goes to just four and seven apps respectively.

Number of applications responsible for 10 percent of revenues and downloads in Apple App Store and Google Play, according to Disimo
  November 2012 January 2012
  10% of app store downloads 10% of app store revenues 10% of app store downloads 10% of app store revenues
Apple iPhone 31 apps 7 apps 30 apps 7 apps
Apple iPad 31 apps 6 apps 20 apps 6 apps
Google Play 22 apps 4 apps N/A 4 apps
Source: © Distimo (December 2012) via: © mobiThinking

5c) Who’s losing money?

The majority of developers are below the app poverty line.
VisionMobile (January 2013): For the majority of developers, app development is not financially rewarding. 67 percent of developers earn less than US$500 per app per month. This is below the app poverty line i.e. they are not making enough to sustain them or their business. (This excludes the 18 percent of developers who are not interested in making money).
• Poverty levels are least among HTML5 developers at 45 percent (compared to Android at 54 percent and iOS at 53 percent). VisionMobile says: “There are fundamental differences between HTML and native platforms that are responsible for the differences observed here: developers using HTML for Web development have access to a much larger user base comprising desktop and mobile users, irrespective of platform. Among HTML developers, subscription-based revenue models are much more popular than on native platforms, pointing to established online content or service businesses that have expanded on to mobile.”

Revenue distribution by platform according to VisionMobile
  Not interested in money Below poverty level Above poverty line
Earnings N/A below $500 per app/month above $500 per app/month
Android 20% 54% 26%
BlackBerry 14% 68% 18%
HTML5 27% 45% 29%
iOS 11% 55% 34%
Windows Phone 20% 61% 19%
Source: © VisionMobile (January 2013)
Survey sample: 2,534 developers
via: © mobiThinking

mobiThinking note: The VisionMobile data is from the excellent free Developer Economics 2013: The tools report. Read it before you start developing your (next) app.


6) How do you make money from apps?

Consumers are less and less willing to pay up-front for apps, so app publishers have to consider other ways to try to make money, either via advertising or in-app purchasing.
Gartner (September 2012) predicts: in 2013 there will be 81.4 billion downloads of apps, 90 percent of these will be free apps; by 2016 there will be 309.6 billion app downloads, but 93 percent will be free i.e. only 7 percent of apps will be paid for.
• The number of downloads featuring in-app purchase will increase from 5 percent of total downloads in 2011 to 30 percent in 2016. The share of revenue from in-app purchases will grow from 10 percent in 2011 to 41 percent in 2016.
• Gartner advises: To make money from apps, publishers must win and maintain customer loyalty/satisfaction through superior app performance and design, then hope to make revenue through in-app purchasing.
Distimo (March 2013): In-app purchases now generate the majority of the revenue in the app stores, rapidly replacing pay-to-download as the main revenue model. In-app purchases made up 76 percent of revenue in the US Apple App Store for iPhone in January 2013, up from 53 percent in January 2012 (paid-for apps fell from 47 to 24 percent). In some Asian countries, such as Hong Kong, Japan, China and South Korea, over 90 percent of app store revenue is from in-app purchases. In other countries, it is much less; in Germany, for example, it is only 61 percent.
Distimo (July 2012): Comparing June 2010 to June 2011, the average selling price of the top 200 paid apps in Apple’s App Store declined by 16 percent, resulting in an overall 5 percent reduction in revenue. (By comparison downloads of free apps increased 118 percent during the same period).

Downloads of mobile apps from all stores worldwide, 2010-2016 according to Gartner
  2011 2012 2013 2014 2015 2016
Free downloads 22.1 billion 40.6 billion 73.3 billion 119.9 billion 189 billion 287.9 billion
Paid-for downloads 2.9 billion 5.0 billion 8.1 billion 11.9 billion 16.4 billion 21.7 billion
Total downloads 24.9 billion 45.6 billion 81.4 billion 131.7 billion 205.4 billon 309.6 billion
Percentage free downloads 88.4% 89.0% 90.0% 91.0% 92.0% 93.0%
Source: © Gartner (September 2012) via: © mobiThinking


Further reading on mobile apps:

The insiders’ guide to mobile app promotion: top tips for marketing your app from industry experts
28 percent of the top 100 apps still don’t have a privacy policy
How greedy is your app – does it drain batteries or gobble data?
Do mobile apps deliver ROI?
Mobile apps: It’s all about the design


7a) How many app stores are there?

Mobile app developers are faced by a bewildering array of app stores. It is unclear how many app stores there are exactly.
Mobyaffiliates recently established a directory of mobile app stores. They found a staggering 70 app stores, which they categorized by: cross-platform (26); Android (13); iOS (5); BlackBerry (3); manufacturer-operated (7); carrier-operated (16) app stores.

7b) What are the largest app stores?

The largest apps stores are believed to be the Apple App Store – Apps for iOS handsets only – and Google Play – apps for Android handsets only.
Apple (May 2013) claims: there are 850,000 mobile apps in the Apple App Store.
Canalys (May 2013): there are over 800,000 apps available on Google Play and Apple App Store;
Windows Phone store contains over 145,000 apps; BlackBerry has in excess of 120,000 BB10 apps (pretty impressive considering that BB10 only launched in January).
“At a certain point, how many apps are in a store becomes irrelevant. Offering 100 different unit converters or weather apps is not a valuable choice,” says Canalys.
GetJar (September 2012) claims: to be the largest independent app store (i.e. it isn’t tied to one operating system, carrier etc), with 600,000 mobile applications – it isn’t clear if the same app for different platform is counted twice.
mobiThinking note: The Apple App Store enjoys a monopoly over apps for iOS handsets, unless consumers use jailbreak apps to break the restrictions Apple places on how they use their handsets. Google Play is not a monopoly, but benefits from Android handsets being the most popular type of smartphone – Google Play is also the default store, coming pre-installed on masses of Android handsets.

7c) What are the best app stores?

Since biggest isn’t necessarily best, developers need to find the app stores that best meet their requirements. The ABI Research is a good start, but it would be good to see more research in this area.
ABI Research (January 2013) ranks Apple as the top mobile app store, with Google second and Microsoft third. Apple’s ranking is based on its market share and its approach to monetization.
• Microsoft’s store is considered the most innovative due to its efforts to rank apps on customer satisfaction and retention, which are more meaningful than downloads. Hopefully moving away from rankings based on downloads will reduce the need for app publishers to invest in costly marketing campaigns to drive downloads.
Canalys (April 2012): in Q1 2013, Google Play saw the most downloads: 51 percent of downloads from Apple’s App Store, Google Play, the Windows Phone Store and BlackBerry World; but Apple’s App Store made the largest share of revenue at 74 percent of the four-store total.
mobiThinking note: The app store model is far from perfect – terms and conditions can be restrictive, the stores demand large shares of revenue, there are issues with security and over-crowding makes it difficult to for new apps to discovered by users. This is one reason why there is a fierce debate between developing native apps or Web-based apps: Web apps don’t need app stores.


Further reading on mobile apps:

What you can learn from the FT Web app: interview with Steve Pinches
Native v Web apps


8) What type of apps are most popular/abundant?

Games are the most popular type of app with the users. They also make the most money.
Distimo (2012 Year in review): The most downloaded apps are games (33 percent); widgets (8 percent); entertainment (7 percent); social (5 percent); lifestyle; music; photography; productivity (all 4 percent); tools; communication; utilities (all 3 percent). Games also dominate app revenues.
Portio Research (April 2013) calculates: top categories (by number of apps) on the Apple App Store: games (17 percent of all apps in store); Google Play: games (15 percent); BlackBerry World: books (15 percent), games (9 percent); Windows Phone Store: entertainment (19 percent), tools & productivity (15 percent), games (12 percent).
• The second most popular app category, overall, after games is messaging apps, also known as over-the-top (OTT) apps, according to Portio. It is estimated that there are at least 1 billion OTT messaging apps users around the world. The most popular of these are: Facebook Messenger (700 million users worldwide); WeChat (300 million); What’sApp (200 million); Viber (175 million); Line (100 million); Kakao Talk (70 million); BBM (60 million); iMesssage (45 million); ChatON (10 million); Skype (10 million).


9) Which apps are most used?

comScore (February 2013): The top 10 smartphone apps in the US in 2012 were: Facebook (with an estimated reach of 76 percent of US smartphone users); Google Maps (65.9 percent); Google Play (54.3 percent); Google Search (53.5 percent); Gmail (47.6 percent); YouTube (46.4 percent); Pandora Radio (42 percent); Apple iTunes (41 percent); Cooliris (38 percent); Yahoo! Messenger (32 percent).
• comScore: the only thing that knocked Google Maps off the number one spot was Apple’s decision (later retracted following user outrage) to replace Google Maps by Apple Maps on iOS 6. Note: Google apps still held positions 2-6.
Nielsen (June 2012): The most popular shopping apps in the US are: eBay Mobile (with an estimated 13.2 million users in June); Amazon Mobile (12.1 million); Groupon (11.9 million); Shopkick (6.5 million); LivingSocial (4.4 million); Walgreens (2.8 million); Target (2.2 million); RedLaser (1.9 million); Out of Milk Shopping List (1.7 million); SavingStar Grocery eCoupons (1.6 million).
Nielsen (May 2012): On average US smartphone users have 41 apps downloaded to their devices and spend 39 minutes using apps per day.
• Nielsen: Privacy is a concern with the vast majority of app users. 73 percent express concern over personal data collection and 55 percent are wary of sharing information about their location via smartphone apps.
Further reading: Five common compliance and privacy mistakes


10) How many apps fail? How many are downloaded, tried and deleted?

One in four mobile apps once downloaded is never used again.
A study by Localytics (January 2011) found that many apps are downloaded, tried once and then discarded.
• “Tracking downloads is often a first step to gauging an app’s success, but download stats often provide an incomplete and inflated view. High download numbers always feel great, but if those customers never open the app or abandon it after just a few uses, those high download numbers are really part of a high churn rate.” – Localytics study (Localytics makes analytics tools for mobile apps).

Number of apps downloaded and used just once according to Localytics
Quarter January-March 2010 April-June 2010 July-September 2010 October-December 2010
Proportion of apps used only once 22% 26% 26% 26%
Source: © Localytics (January 2011) via: © mobiThinking

11) Is a mobile app a substitute for a mobile Website/mobile-optimized Website?

Mobile apps and mobile Websites are two entirely different things and serve different markets, but there is sometimes confusion among people who are new to mobile. A mobile app is not a substitute for a mobile-optimized Website, for the following reasons:
• Far more people use cell phones to access the Internet than download apps. There are 2.1 billion active mobile broadband subscriptions worldwide (ITU, February 2013). While the number of mobile broadband subs is usually a good indicator of mobile Web users, it could be considerably higher than this – as you don’t need a 3G subscription to access the Web on a handset, in China, alone, there are estimated to 420 million mobile Web users (CNNIC, February 2013). Any which way, the number of mobile Web users will dwarf the 1.2 billion people worldwide who use apps (Portio Research, March 2013).
• While it is possible that a mobile Web user may never download/use a native app, it is unfeasible that a native app user would never use the mobile Web. At some point they will always click a link to a third-party Website, either from an app, or from a banner ad in an app or an SMS or email. For some activities, such as researching a purchase, mobile Web will always be preferable. What’s easier, doing a Web search for an item, e.g. a new TV, then visiting each review, retailer and brand site or opening each retailer’s app one after another to find the best deal? Research by Google (April 2013) found that 65 percent of US smartphone shoppers preferred to use mobile Web to mobile apps for shopping. Similarly a study by Nielsen (February 2012) found that retailers’ mobile sites are up to two times more popular over the Christmas shopping period than apps.
• Mobile Web sites work on any handset with a mobile browser (the vast majority of handsets). While apps could be designed for any handset, the present trend is to concentrate on smartphones, often restricting coverage to one or two types of smartphones. Smartphone penetration only recently broke the 1 billion mark, according to Strategy Analytics (October, 2012) – that means that even if you develop an app for every smartphone platform, you exclude 80 percent of mobile users.
• N.B. While mobile apps and mobile Websites should never be regarded as rivals, mobile apps and Web-based mobile apps can be considered rivals.


Further reading on mobile apps:

65 percent of US smartphone shoppers prefer to use mobile Web to mobile apps for shopping. Is that shocking? It shouldn’t be.
Native v Web apps
What you can learn from the FT Web app: interview with Steve Pinches
How greedy is your app – does it drain batteries or gobble data?


12) How many businesses use/will use enterprise (private) app stores?

Gartner (April 2013) predicts that by 2017, 25 percent of enterprises will have an enterprise app store.
Enterprise app stores promise greater control over the apps used by employees, greater control over software expenditures and greater negotiating leverage with app vendors, but this greater control is only possible if the enterprise app store is widely adopted.
• Gartner: "Apps downloaded from public app stores for mobile devices disrupt IT security, application and procurement strategies. Bring your own application (BYOA) has become as important as bring your own device (BYOD) in the development of a comprehensive mobile strategy.
Gartner (February 2013) by 2016, more than 50 percent of mobile apps deployed will be hybrid. Companies are under pressure from management and employees to develop and deploy mobile applications to accommodate mobile work styles and increase customer engagement. To provide apps for multiple platforms, especially as BYOD gains momentum, companies will be attracted to the portability of HTML5 Web apps, but the need to tap into native functionality such as the camera and GPS, necessitating wrapping the Web app in a native container.


FINDING YOUR WAY AROUND THE MOBILE STATS COMPENDIUM:
Home: Full index of contents and highlights • Section A: Mobile subscribers; handset share • Section B: Mobile Web; 3G • Section C: Mobile marketing, advertising and messaging • Section D: Consumer mobile behavior • Section E: Mobile apps, app stores • Section F: Mobile payment, NFC, m-commerce, m-ticketing and m-coupons • Section G: Mobile financial services (MFS) and m-banking • Section H: VC investment in mobile.

Don’t miss:

• How greedy is your app – does it drain batteries or gobble data?
• Five common compliance and privacy mistakes
• Websites must be mobile-friendly to comply with FTC’s new digital advertising guidelines
• The insiders' guides to world’s greatest mobile markets • New country guide: Sweden
• Mobile/smartphone sales 2012: the big picture
• Guide to mobile ad networks • Latest ad network profiles: HandsTwinpine
• Guide to mobile agencies • Latest agency profiles: PontomobiThe Hyperfactory
• Guide to mobile industry awards • Check out the video case studies: GSMA Global Mobile Awards
• Mobile events 2013 • best conferences, great discounts and free tickets •
• The big compendium of global mobile stats
• Most popular content on mobiThinking in 2012


Posted by mobiThinking - 26 May 2013

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mobiThinking focuses on everything you need to know on the business of mobile and web. With an exhaustive compendium of mobile statistics, practical guides to mobile agencies, ad networks, top mobile markets and more; interviews and analysis, industry events and awards.

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