Users spending more money and less time on mobile apps

More than 17 percent of U.S. smartphone users who installed mobile applications in 2008 spent between $100 and $499 on premium apps according to a new consumer report conducted by market analysis firm ABI Research, which means that a sizable chunk of the mobile subscriber population now forks over more on applications per year than on devices themselves. The ABI study, conducted in November 2008 among 235 U.S. smartphone owners, contends that the level of spending is particularly significant given the low price point of most applications--after all, consider that late last year, news site reported about a third of the premium downloads available in Apple's App Store are priced at 99 cents and nearly a fifth are free. In fact, ABI Research notes that while App Store applications drive the price of content down to $1 or $2, if you exclude Apple from the mix, apps for other platforms cost about $7 to $25 each.

Of course, that disparity presents a major dilemma for independent developers, most all of whom lack the financial resources necessary to create applications for all of the available smartphone platforms. ABI contends focusing on one platform creates a "margin vs. volume" quandary, demanding that developers either sell a large number of app downloads through the App Store at discount prices or else sell fewer applications via rival application storefronts at a higher premium, earning more per transaction.

It's not an easy decision to make, but new data released by iPhone analytics firm Pinch Media may offer some new insight on whether to pursue App Store riches or not. Pinch Media found users stop using the average iPhone app almost immediately--long-term audiences generally represent just 1 percent of total downloads, and only 20 percent of users ever return to an application the day after downloading it. Although premium iPhone apps retain users longer than free apps, the dropoff is steep regardless; Pinch Media adds that the biggest usage differentiator is category, with games enjoying longer periods of use than any other type of iPhone application.

With more than 15,000 iPhone apps now available, it's also tougher than ever to get noticed in the App Store. Pinch Media reports that six months ago, 1,000 downloads in a 24-hour period was enough to break the Top 100 countdown, and 10,000 in a day was enough to vault an app into the Top 25--now it takes 5,000 daily downloads to enter the Top 100, and 20,000 to land in the Top 25. Baseball great Yogi Berra once dismissed a popular St. Louis restaurant by claiming "Nobody goes there anymore--it's too crowded." There may soon come a point in time when some mobile developers sidestep the App Store for the same reason. -Jason