Despite surging consumer interest in Google's (NASDAQ:GOOG) Android mobile operating system, Apple's (NASDAQ:AAPL) App Store remains the 800 lb. gorilla of the worldwide application retail segment, generating revenues of $1.8 billion in 2010 according to research firm IHS Screen Digest. Worldwide mobile app revenues increased to $2.2 billion in 2010, a 160.2 percent annual increase over 2009 revenues of $828 million; App Store revenues increased 131.9 percent year-over-year, rising from $768.7 million in 2009.
The App Store now controls 82.7 percent of the worldwide app market, down from 92.8 percent the previous year, IHS notes. Research In Motion's (NASDAQ:RIMM) BlackBerry App World is second with 2010 revenues of $165 million, translating to 7.7 percent market share and year-over-year growth of 360.3 percent; Nokia's (NYSE:NOK) Ovi Store is next at $105 million, corresponding with 4.9 percent market share (up 719.4 percent year-over-year), with Android Market bringing up the rear at $102 million, accounting for 4.7 percent of the market but experiencing 861.5 percent annual growth.
Looking ahead at 2011, IHS forecasts app revenues to increase another 81.5 percent, reaching the $3.9 billion mark. The firm anticipates the "freemium" business model (in which apps are downloaded free of charge, with users paying for premium features) will drive future market growth: "As application stores become more and more crowded, with hundreds of thousands of apps available on the leading stores, developers increasingly are opting to release their content for free," said IHS mobile media analyst Jack Kent in a statement. "They do this in the hope that they can monetize their apps by offering additional content or functionality via in-app purchases and advertising."
IHS anticipates freemium purchases will yield about half of all North American app revenues in 2014, up from 24 percent in 2010. Also galvanizing growth: Apple's iPad tablet. With iPad app downloads costing more than corresponding iPhone downloads, IHS believes iPad users will account for about half of U.S. App Store revenues in 2014 despite a smaller installed base--iPad users represented less than 20 percent of App Store revenues in 2010.
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