2010 called breakthrough year for mobile apps

This will be the big year for mobile applications, according to ABI Research, which expects downloads from app stores to more than double from 2009 and then grow more slowly through 2013.

Consumers are downloading more apps partly because they are buying more smartphones, according to ABI, which measured a 20% rise in sales of the high-end devices last year. But application strategies by rivals to Apple's dominant iPhone, including Android, Windows Mobile, BlackBerry and Symbian, also should start to take hold this year, said ABI analyst Mark Beccue. Apple won't be standing still, as it unveils the next version of the iPhone OS this week.

Mobile application downloads will rise about 145% this year, to 5.9 billion from only 2.4 billion in 2009, ABI predicted on Monday. Though Apple will remain the biggest part of the market, with about 3.3 billion downloads, Android will grow fastest, ABI said. It expects users of Google's mobile OS to download more than 800 million applications this year. ABI forecast only downloads from mobile application stores, but it doesn't know of any other avenue that consumers use for a meaningful number of downloads today, Beccue said.

The rising tide of smartphone sales and consumer desire for mobile apps will benefit all four of Apple's biggest rivals, Beccue said. But Apple will keep the majority of the market through 2015, while none of the other platforms will gain significant ground on the others, he said. Meanwhile, Palm won't achieve a major chunk of the market in that period, ABI predicts.

After the meteoric growth this year, downloads for the whole mobile application market will grow less than 9% in 2011, and the increases will slow until 2013.

The golden age of mobile app downloads may be short lived, according to ABI. Revenue is likely to fall by 2012 as competition among developers and app stores drives prices down and leads to more free and advertising-supported applications, including alternatives to brand-name apps that consumers pay for now.

After 2013, even the number of downloads will decline, ABI forecasts, looking at the trend of phone makers bundling more applications with their handsets. Nokia, Samsung and Motorola are among the handset vendors integrating some social-networking functions into their devices. Slowing growth in smartphone sales, and consumers' difficulty in finding applications in vast stores like the iPhone App Store, may also hurt downloads, Beccue said. There are already so many offerings on the big app stores that some small developers are frustrated, he said.

"As a paid model, it starts to become something like a lottery," Beccue said. He predicts that free applications, used as marketing extensions by companies that sell other products, will become a growing part of the mobile mix.

Downloading applications to phones is especially popular in the U.S., while Europe is starting to catch on, but ABI doesn't expect people in other parts of the world to embrace the trend in the same way, because of economics and a variety of other factors.

"In this case, the U.S. has become the leader in this next round of mobile innovation," Beccue said. "We see that habit continuing. The appetite stays."

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