App developers may struggle to profit, but apps are useful for brand building
Major international research firm Gartner took a look at the general world of apps this week and concluded that a bewildering surfeit of literally millions of products and stiff competition from freebies is making it increasingly difficult for developers to make a decent profit from their labours.
In fact, most mobile apps make little or no money for their developers, but can be useful to create brand awareness, the research company concluded.
Major platforms like Google’s Play Store, Apple’s App Store, BlackBerry’s App World and Microsoft’s Windows Store all boast a slew of apps available for download, but Gartner analysis shows that most mobile applications are not generating profits and that many mobile apps are not designed to generate revenue, but to build brand recognition and product awareness, says Ken Dulaney, vice president at Gartner.
Dulaney says that mobile app leader Google Play has about 1.1 million mobile applications available for download despite regular culling drives to remove outdated or low quality products.
He opines that with such a bewildering array of choices available many users eschew trawling through long lists in favour of recommendation engines, friends, social networking or advertising when searching for mobile applications.
And he believes that by 2018, less than 0.01 percent of apps will be considered a financial success by developers.
That does not mean that paid apps are dead; Apple recently reported app sales and in-app purchases of $10 billion in 2013, taking a 30 percent cut of developers’ sales. But that could decline in future.
"There are so many applications 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," Dulaney says.
"Furthermore, of paid applications, 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.
One approach to increasing profitability is to offer users a free app but with in-app purchases that enhance their user experience or create better rates of success within the activity served by the app.
It is also important for developers to design their apps for use across multiple platforms in order to increase accessibility and thereby use.
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