Mobile commerce is more than just app purchases

The estimated $66 billion mobile economy is growing, both in revenue and diversity.

Reports of mobile app store revenues were once the entire measure of the rapidly changing mobile economy. But the displacement of desktop browsing with free mobile apps from established brands such as Amazon and disruptive new business models such as Uber make measuring the mobile economy more complex. Additional measures of the economic impact of free apps would be useful in painting a complete picture of the mobile economy.

Earlier this week, Canalys reported that app downloads increased 11% in Q1 2013. In the last quarter, two apps were downloaded for every person on the planet, totaling 13.4 billion downloads with the value of paid downloads and in-app purchases reaching $2.2 billion, an increase of 9% over the last quarter.

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The stunning growth of mobile apps as reported still transfixes one’s attention because of the rapid pace of transition to mobile in just over five years. The sheer magnitude of app downloads confirms that in conjunction with mobile search and mobile social networks, mobile apps are a permanent component for monetizing the internet. But these measurements don’t fully portray the robustness of the mobile economy.

As big and as rapidly growing as the mobile market is, it is immature and precise measurement is elusive; however, it is possible to estimate the relative magnitude of its components.

Canalys’s Tim Sheppard estimates that app downloads will exceed 20.5 billion in Q4 2013, bringing revenues to $3.1 billion. In addition to the downloads and revenues reported by Canalys, eMarketer recently announced its annual projections for mobile commerce (mCommerce), at $38 billion excluding travel and ticket sales. PhoCusWright pegs annual mobile travel revenues to triple between 2012 and 2014 to reach $25 billion.

While there is every reason for caution when combining estimates from three different analytic firms, annualizing and combining the app purchase, mCommerce and travel booking estimates of the three firms produces a combined estimate of a mobile economy of $66 billion in 2013, excluding smartphone and tablet hardware. A big market by any measure, even if it is adjusted up or down significantly to reflect errors and inter-category accounting.

This focus on app downloads and paid downloads is historical. Up until a few years ago, there was little other mobile-related economic activity except for device and app purchases. These figures can be more accurately confirmed given the smaller number of app stores and the longer operating history of this channel.

This approximation does not include other measures of the economic impact of the mobile economy, such as mobile advertising, ticket sales and enterprise productivity gains. It points to its magnitude and its overall social and economic impact.

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