Additional InformationExecutive summary
Software especially developed for mobile phones has been around for well over a decade
and before the term application (app) store was popularized, distribution of mobile content
and applications was often realized through portals which were managed by network
operators. Operator portals had some success in selling mobile content but the ecosystem
was at first unclear and did not attract enough developers and users to really take off. The
Apple App Store - an on device centralized store - with easy to find applications and with a
simplified business model for developers, was later the disruptive force that kick-started the
market for mobile applications. The success was immediate and within its first week of
operation, the App Store accounted for 10 million app downloads. Today all leading
operating system providers and handset vendors have followed and launched their own
The ecosystem around devices consisting of services and applications has today become an
important influencing factor for users when choosing handsets. Therefore, it is important for
mobile platform vendors to achieve a prosperous mobile app ecosystem that creates
revenues for publishers and value for end users in order to increase customer loyalty and sell
more devices. Even though the directly generated revenues in mobile app stores still are
comparably small, the importance of mobile apps is self evidential when observing the
consumer interest in apps as well as the fact that apps attract and generate revenues for a
growing mobile community of software developers, publishers, media owners and mobile ad
In 2010, there were approximately 10 billion app downloads made on all mobile platforms.
Consumers are getting used to expanding the functionality of their devices through apps and
Berg Insight anticipates the number of app downloads to almost threefold year-on-year in
2011. Even if featurephones are able to run apps, the increased sales of smartphones and the
rising popularity of apps are closely tied together. In 2015, over 70 percent of all handset
shipments will be smartphones, building a large user base that will spur the number of app
downloads to reach almost 100 billion during 2015. The number of app downloads per
platform will gradually mimic the market share for each mobile platform. However, some of
the newer platforms, such as iOS and Android, are much more app centric than older
platforms such as Symbian. Also, network effects in the symbiosis between users and
developers, reinforces the most popular platforms and attracts both more developers and
users. Berg Insight forecasts that iOS and Android combined will serve over 62 percent of the
total app downloads in 2015. The Windows Phone operating system is projected to be the
third most popular application platform in 2015.
Berg Insight estimates that revenues from paid applications, in-app purchases and
subscription services - so called direct revenues - reached 1.6 billion in 2010. Berg Insight
forecasts direct app store revenues to grow at a compound annual growth rate of 40.7
percent to reach 8.8 billion in 2015. Apple’s iOS is the current leader in direct monetisation
of mobile applications and will keep the number one position during the forecast period. In
2010, the Apple App Store generated revenues of 1.33 billion. In 2015 the company’s app
store is predicted to generate 4.4 billion in direct revenues. The Android platform is the
second largest platform in terms of direct revenues and generated 80 million during 2010
which will grow to almost 1.5 billion in 2015.
The market for in-app advertising took off during 2010 as a means to capitalize on free apps.
In-app advertising generated 300 million representing 16 percent of the total app revenues
during the year. In 2011, app advertising revenues will more than double to reach 750
million. The in-app advertising revenues will increase throughout the forecast period and in
2015, in-app advertising is forecasted to generate 3.5 billion corresponding to 29 percent of
the total app revenues. In-app advertising is more of a volume game and Android will surpass
iOS in 2012 as the platform that generates most in-app ad revenues. Berg Insight predicts
Android to generate over 1.2 billion in in-app ad revenues in 2015, up from 39 million in
2010. The iOS platform generated 230 million in 2010 and is forecasted to reach almost
1.0 billion in 2015.
About the Author
Johan Svanberg is a Senior Analyst with a Masters
degree from Chalmers University of Technology. He joined
Berg Insight in 2007 and his areas of expertise include
embedded connectivity and mobile applications.
Berg Insight offers premier business intelligence to the
telecom industry. We produce concise reports providing
key facts and strategic insights about pivotal developments
in our focus areas. From time to time we also perform
custom research assignments. Our vision is to be the most
valuable source of intelligence for our customers.
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