Of the 45.6 billion mobile applications people will download this year, nearly 90 percent will be freebies, according to new research from Gartner. Though not surprising, that tidbit of information may help guide developers in their quest to release the next big mobile app -- and to strongly consider embracing the in-app purchase model.
All told, Gartner estimates that free apps will account for 40.1 billion of all downloaded mobile apps, while paid-for downloads will total five billion. Gartner expects that come 2016, customers will download a total of 309 billion applications, 93 percent of them free.
"In terms of the apps that consumers are buying, 90 percent of the paid-for downloads cost less than $3 each," said Sandy Shen, research director at Gartner. "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."
Customer preference for free and cheap apps doesn't mean developers will be forced to sell spare organs to make ends meet, of course. Rather, they have the ever-popular option of providing applications as free downloads, then charging users to unlock particular features, to acquire add-on content or to let users continue using software beyond a trial testing period. Market research company iSuppli predicted earlier this year that the market for in-app purchases -- which can range from in-game currency to snazzy features -- will increase from $970 million in 2011 to $5.6 billion in 2015.
Gartner, too, is bullish about the revenue-generating potential of in-app purchases. The company expects the number of downloads featuring in-app purchasing will increase from 5 percent of total downloads in 2011 to 30 percent in 2016, and its contribution to the store revenue will increase from 10 to 41 percent in the same period. Notably, Microsoft recently unveiled its pricing structure for the Windows Store, highlighting the fact that it will support in-app purchases right out of the gate.
"In-app purchasing opens the door to a recurring revenue stream for developers," according to Gartner, "but app performance and design will always be the most important factor when attracting new users and keeping them satisfied."
For the time being, Apple holds the largest market share for mobile apps, Gartner said. The company expects the App Store to have more than 21 billion downloads this year, a 74 increase over 2011. The Apple App Store accounts for 25 percent of all available apps in all stores, according to Garnet. In the long run, Gartner predicted that Apple, Google, and Microsoft will be the leaders in the mobile app space.
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