6 major trends shaping the smartphone app ecosystem in 2010

The new smartphone applications ecosystem created by Apple is only two years old. The market is very dynamic and not a day goes by without a new entry to the market, or an announcement from a major player that has a significant impact upon the mobile market.

The first six months in 2008, after the launch of the Apple App Store, proved to be an Eldorado for developers who quickly jumped on the band-wagon, realizing amazing downloads numbers for, generally speaking, very simple applications. In 2009 the market swelled with tens of thousands of new apps, making it more and more difficult for individual apps not to be lost in the long tail. Nonetheless the mass of developers adhere to IOS as their preferred mobile development and distribution platform.

Major trends shaping the app ecosystem

In 2010 the smartphone applications market has entered a new phase. The main developments can be summarized in terms of six major trends.

1. Increased market growth: The pace at which the market is growing has accelerated again. Combined download numbers as well as revenue of all major application stores reached 2009 levels in only five months. App revenue for 2010, which will almost triple in relation to 2009 figures, is set to reach almost $US5bn.

2. Deceleration of price decline: During the first two years until the end of 2009 the average price of an application dropped from US$20 to almost US$4. The first half of 2010 saw this erosion almost halted. At the same time this trend is accompanied by major price movements within app stores which demonstrate price increases of as much as +30%, and similarly declines as steep as -30%. This might indicate greater market transparency and simpler arbitrage processes.

3. Apple’s competitors increased their market share: Not surprisingly the sheer volume of new competitors had an impact on the market dominance of Apple in the applications business. In 2010 developers and smartphone users started to focus on platforms alternative to Apple, who lost almost 10% of market share in the first half of 2010.

4. Omnipresence of Android: At the end of 2009 only six devices used the Andoid operating system. During the first six months of 2010, however, smartphone device manufacturers released a new Android device every 2-3 days. In 2010 the number of smartphone models using an Android system overtook the number with other OS platforms like Windows and Symbian for the first time since the launch of the Apple App Store in 2008.

5. Smartphone shipments remain the main market driver: The shipment of smartphones has already reached almost 30% in some industrialized countries. Furthermore the number of smartphones shipped in the first HY 2010 was already 70% of that reached throughout 2009. All of these smartphones provide easy access to application stores, and this in turn drives application download numbers.

6. Companies are getting in on the act: By the end of 2009 less than 10% of global companies had a presence in one or more app stores. The latest analysis shows that over the last few months the activity levels of major brands has increased. In addition to branding, companies are also increasingly using applications to link to their core products or to build transaction business.

What is your view on the key market drivers in the smartphone apps market?

For more information please contact:
Robert Karsten, [email protected] or call 49 30 60 989 3366.