Why Gartner's 0.01% prediction about mobile app revenue needs explaining

Shane Schick

There's been plenty of talk about the rising anger between the majority of workers and the elitist "1 percent," but in the mobile world developers are competing even harder to be in the 0.01 percent.

According to Gartner, that's the percent of developers who will actually make money from what they produce. This finding quickly generated a slew of negative headlines like, "The sad truth is you probably won't strike it rich by making a mobile app" and "Nobody wants to pay for apps." What was missing from the coverage was the following quote from Gartner analyst Ken Dulaney: "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. Application designers who do not recognize this may find profits elusive."

Gartner's findings are not really aimed at independent mobile developers at all, but instead at large enterprises that are considering mobile apps as an extension of their business or as an investment opportunity. The average small dev already knows the chances of becoming the next Rovio are pretty slim, and to bandy about the 0.01 percent figure is just needlessly discouraging to others thinking about getting in the game. 

The only person I saw who went past the surface here was Clint Parr, who wrote a blog post at Macrosolve that looked at Dulaney's other statement that most apps generate less than $1,250 per day. Assuming that a company rather than an indie was developing the app and was spending tens of thousands of dollars to outsource it, Parr wrote: "If the app scales up to $1,250 per day in revenue, starting at $10 per day in revenue and adding ten additional dollars each day, the app venture cash flows  $78,750 over a 125 day period. Now the venture is near the breakeven point. If the revenues flatten at $1,250 per day thereafter, the developer will enjoy $378,750 in mostly passive cash flow over a one year period."

Nice work if you can get it, right? The Gartner estimate also doesn't take into account monetization strategies outside of paid downloads, such as in-app advertising or in-app purchases. These things could change the economic picture entirely.

It's worth looking at exactly what Gartner said in its report: "Gartner, Inc. predicts that through 2018, less than 0.01 percent of consumer mobile apps will be considered a financial success by their developers." Thus, it's worth asking developers what they would consider a financial success. Is it making a profit? Breaking even? Generating any revenue at all versus none? Then it's worth asking, if you take the qualifier "financial" off of it, what "success" means to them. I'm willing to bet you'd get a range of answers that not even a Gartner would be able to predict. --Shane

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