iOS, Android shape mobile app growth

Mobile application downloads from iOS - the iPhone's operating system -  are forecast to make up for 52% of the total this year. Together with downloads from Google's Android, the two operating systems are forecast to account for 78% of all app downloads this year, according to ABI Research.

The research firm found that the numbers are driven by availability, variety and novelty in both the Android Market and the iTunes App Store. Also, the sale of Android phones has taken off in 2010, with over 160,000 activations being reported daily.

Analyst Bhavya Khanna said downloads from other platforms such as Blackberry's App World and Nokia's Ovi Store remain sluggish, hampered by a lack of variety and fragmentation among both manufacturers' many devices.

Revenues from mobile app sales continue their decline, as competition leads to a "race to the bottom." Full-featured games are available from between $0.99 and $5, and many popular applications are adopting ad-supported models.

Application store owners such as Google, Apple and mobile operators will continue to support low-priced and free applications because they help market and sell their devices. Making money will become a difficult proposition in a market that is expected to peak in 2011, with annual sales of just under $8 billion.

In a separate report, Juniper Research expects players across the mobile value chain to drive growth of consumer-oriented handset downloads as they seek to emulate Apple's success with the App Store. The study found that such firms are launching own-brand storefronts such as Mobile Market from China Mobile, Airtel App Central from Bharti and the Apps & Games Shop' on Vodafone 360.

Given this development, Juniper expects yearly download numbers to rise from less than 2.6 billion in 2009 to more than 25 billion in 2015. In fact, the transition to an app-centric environment has also benefited more established storefronts such as GetJar, which passed a billion downloads last July.

However, report author Windsor Holden cautioned that players seeking to launch app stores would need to demonstrate sufficient scale to be able to induce developers to provide them with unique content.

"Apple has been able to achieve several billion downloads from a comparatively small handset base because customers are buying the iPhone for the apps," Holden said. "That's not been the case with other handsets."

He said that even with a subscriber base of tens of millions, a player's addressable market is a fraction of that and spread across a variety of operating systems and handsets.

The Juniper report also noted that "freemium" was becoming the prevalent business model. Publishers are increasingly offering apps free at point of sale and subsequently monetizing them via in-app billing of subscription-based services, upgrades to premium content or micropayments for virtual items.

Despite Apple's momentum, a third report by iSuppli forecasts Google to overtake Apple's market share by 2012. iSuppli said Android will be used in 75 million smartphones by 2012, up from five million last year. During the same period, iOS usage will amount to 62 million from 25 million.

This will give Android a 19.4% share of the global market in 2012, up from 2.7% in 2009. In contrast, The iOS will see its share settle at 15.9%% from 13.8%. In 2014, Android's share of global smartphone OS usage will rise to 22.8% while iOS will decline to 15.3%.

Apple's booming iPhone sales have been fueled by the more than 200,000 items in the its App Store. The Android Marketplace is the closest competitor to Apple's App Store but only has a quarter of the number of apps.

iSuppli senior director Jagdish Rebello said that total is rising rapidly, allowing Android to close the gap with its more established rival.
 

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