Free app market to soar

The free apps market looks set to soar this year. According to a report by Gartner, this category will account for 89 percent of total app downloads in 2012. It predicts that of the 45.6 billion worldwide mobile app store downloads, free downloads will account for 40.1 billion.

Sandy Shen, research director at Gartner, said: “In terms of the apps that consumers are buying, 90 percent of the paid-for downloads cost less than $3 each. Similar to free apps, lower-priced apps will drive the majority of downloads. Apps between 99 cents and $2.99 will account for 87.5 percent of paid-for downloads in 2012, and 96 percent by 2016.”

Gartner expects Apple’s App Store to have more than 21 billion downloads in 2012, which is an increase of 74 percent over 2011. It said this showed that there would be a continued strong demand for mobile app content, with the market being dominated by Apple, Google and Microsoft.

However, there was good news for smaller players in the market with the company claiming there third party stores are attracting users with their brands or taking advantage of the lack of dominant players in some markets.

“Amazon has appealed to users with its strong brand, global presence and a good selection of high-quality content while Facebook’s recently launched App Center — supporting both mobile devices and desktops — will become a powerful competitor due to its strong brand and leading position in social networking and gaming,” Shen added. “In China, there is a boom market of independent Android stores, due to the lack of presence of Google Play and ‘weak’ stores from CSPs. We expect to see more new entrants to the market, aiming to deepen relationships with their customers and/or to capture some of this growth market.”

Gartner claimed that companies using an in-app purchase business model often found more success and recurring revenue as this gave them the opportunity to convert casual app users into paying customers and keep them with good user experience and continued product updates.

It said this was a different approach from upfront payments where users pay and download, and could sometimes be disappointed by the experience and never come back.

In-app purchases are expected to drive 41 percent of store revenue in 2016. Gartner also said it expected the number of downloads featuring in-app purchase will increase from five percent of total downloads in 2011 to 30 percent in 2016, and its contribution to the store revenue would increase from 10 to 41 percent in the same period.