A mobile app reality check
So few paid apps make money that it's better to draw a salary by building apps for a company than going solo
Computerworld - If you possess programming chops and have dreams of chucking your day job to build a cash cow mobile app in your basement, here's an irksome reality check.
Research firm Gartner says that fewer than 0.01% of consumer mobile apps, or one in 10,000, will make enough money through 2018 to be considered a financial success by their authors.
"The stories of mobile app developers making $1 million in their first month are just the extreme case," said Gartner analyst Bob Hafner in an interview. "Some apps are going to make a ton of money, but they are in the 1% that are regularly downloaded."
With more than 1 million apps in each of the major app stores -- Google Play and Apple's App Store -- there are indeed millions of downloads in a year, but only about 5% of the apps in each of those stores are even trying to make money, Hafner said. "With millions of downloads, the chances are really thin of making a killing."
In 2011, 88% of the 26 million mobile apps downloaded globally were free, according to Gartner. By 2013, 91% of the 102 million apps downloaded were free. By 2017, 268.6 million apps are expected to be downloaded, and 94.5% of them will be free.
Gartner's analysis may come as a big buzz kill for the thousands of computer science students and programmers who dream of writing the next Angry Birds. Wasn't there supposed to be a big apps economy to employ tens of thousands of programmers?
In fact, yes. The apps economy is still there, but is functioning differently and laying a golden egg only for a few hot shot developers. The big money from mobile apps is coming from in-app advertising and app-enabled purchasing of goods and services.
Research firm App Nation reported in July that the combined value of goods and services purchased through apps, plus paid apps and in-app advertising had reached $72 billion, a figure expected to more than double to $151 billion in 2017.
Less than $1 billion of that $72 billion came from paid app downloads, and revenue from such downloads is projected to just slightly surpass the $1 billion mark in 2017, AppNation said.
Of all paid applications, about 90% are downloaded less than 500 times a day and make less than $1,250 a day, Gartner said in a recent report. "This is only going to get worse," the report added. "There will be greater competition, especially in successful markets."
Apps will need to be more sophisticated to do well in the future, while the cost of operations, development, testing, deployment and support will continue to grow, Gartner said. Those factors will apply to both lone wolf developers and big corporations building new apps. In many cases, corporations will build apps to draw attention to its brand and not to generate revenue except through purchases or advertising.
Gartner issued a separate report in November that said in-app advertising will grow in 2014 by 4%, then decline by 2% in 2015 and surge ahead by nearly 6% in 2016. In 2017, Gartner also said in-app advertising will reach $10.6 billion, but that in-app purchases will reach $36 billion.
Hafner's advice was that solo programmers probably shouldn't try to write an app in the hope that it will pay the mortgage or an early retirement. Instead, they should write apps for big businesses and retailers "where they can get paid and generate revenues from other means."
Successful apps, generally speaking, are intended to generate more hits on a website, more stops at an online store, build brand awareness or sell ads, Hafner said. "The apps economy may bolster the overall national GDP, but there are only a few really key ones that drive the revenue."
Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His email address is email@example.com.
- BlackBerry pushes BBM Protected for end-to-end encrypted messaging
- Can Microsoft's Windows Phone OS surge in market share?
- HTC One M8 called a good looker and genuine rival to the Galaxy S5
- Smartphone innovation is slowing, so what's next?
- Studies show Sprint and T-Mobile need to expand U.S. coverage
- Gear Fit: Samsung strikes again with its 'build one of any device' plan
- Nokia Lumia Icon on sale Feb. 20 exclusively at Verizon
- Samsung hints at new UI for upcoming Galaxy S5
- How 'Lenovorola' changes the mobile world
- Google and Samsung grow cozier with patent deal, Motorola sale
Read more about Mobile Apps in Computerworld's Mobile Apps Topic Center.
- Gartner Magic Quadrant for Mobile Application Development Platforms As unprecedented numbers of enterprises build mobile applications, the mobile application development platform market continues to grow and evolve rapidly.
- The Total Economic Impact of IBM's Worklight Platform Mobile is the fastest growing consumer technology in history. As enterprises build apps to engage these new users they are facing increased complexity...
- Improve Your Mobile Application Security with IBM Worklight IBM® Worklight helps organizations extend their business across multiple mobile devices. It provides an open, comprehensive and advanced mobile application platform to help...
- Unlock the Value of Enterprise Mobility Download this guide and learn how to manage the secure deployment of enterprise mobile apps and data, while still encouraging the levels of...
- It's Chaos Out There Worried about your mobile apps? You should be; it's chaos out there. Check out this humorous video and see if you can recognize...
- LIVE EVENT: 5/7, The End of Data Protection As We Know It. Introducing a Next Generation Data Protection Architecture. Traditional backup is going away, but where does this leave end-users? All Mobile Apps White Papers | Webcasts