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Over 99 percent of apps will not make any money

Less than one percent will be considered a financial success
Tue Jan 14 2014, 14:24
A concept image of iPhone apps

ANALYST HOUSE Gartner has predicted that soon less than one percent of software apps will be considered financial successes.

This less than positive forecast means that for all the apps released this year, 99 percent will lose money. This, said Gartner VP Ken Dulaney, flies in the face of what you would expect. In fact, Gartner predicted that by 2018 less than 0.01 percent of consumer mobile apps will be considered a financial success.

"The vast number of mobile apps may imply that mobile is a new revenue stream that will bring riches to many," said Dulaney.

"However, our analysis shows that most mobile [apps] are not generating profits and that many mobile apps are not designed to generate revenue, but rather are used to build brand recognition and product awareness or are just for fun. [App] designers who do not recognize this [might] find profits elusive."

The problem, perhaps, is that there are too many apps. Dulaney described the developer market as "hyperactive", adding that a rush of good quality free apps has set high standards in the industry.

"There are so many [apps] that are free and that will never directly generate revenue. Gartner is forecasting, that by 2017, 94.5 percent of downloads will be for free apps," he added.

"Furthermore, of paid [apps], about 90 percent are downloaded less than 500 times per day and make less than $1,250 a day. This is only going to get worse in the future when there will be even greater competition, especially in successful markets."

Gartner advised developers to remain as open as possible, and recommended developing for HTML5. Immaturity in the market will hold back freewheeling developers in the short term, and during this period they should resist any attempts to lock them into "platform specific browser features".

"At least three platforms (Android, iOS and Windows) will gain significant market share in the smartphone, tablet and PC space, requiring many organizations to support multiple platforms for both consumer- and employee-facing applications," added Dulaney.

"Although more than 100 'platform independent' development tools exist, most involve technical or commercial compromises, such as lock-in to relatively niche technologies and small vendors. This will drive increasing interest in HTML5 as a somewhat-standardized, widely available, platform-neutral delivery technology."

While these are sage comments, there is no denying that there is money to be made in the app stores. Apple recently said that its customers spent over $10bn in its App Store last year, adding that developers have earned $15bn to date.

Free apps are not shy of making money either, and one of the most famous is Candy Crush Saga. One of a band of freemium apps, it dominates the Apple App Store's top grossing list. The game has been downloaded 500 million times. µ


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