An analysis by Pinch Media has found after being downloaded, iPhone applications are rarely used.
Paid applications fare somewhat better, but also suffer a steep and swift decline in how long and how often they're used.
One Pinch recommendation for iPhone developers: charge for your software. That's because advertising-supported "free" software at Apple's App Stor rarely pays off compared to paid applications.
For example, only about 20% of users who download a free application return again one day later. After four weeks, only 5% return. After three months, the percentage is near zero.
Long term audiences for applications are about 1% of total downloads for a given application, the study found. Paid applications generally retain their users somewhat longer.
Pinch is providing an embedded presentation.
Pinch offers analytics and advertising programs intended to help iPhone developers grow their business. The results of the study, based on 30 million downloads from the App Store, reveal that iPhone software developers have to be masters of the particular dynamics imposed by Apple's market model.
The App Stor has several "top lists" based on the popularity. If an application makes the "Top 100" list, it can more than double its downloads.
But getting on those lists is increasingly difficult. A free application today needs more than 20,000 downloads in a 24-hour period to make the top 25 list, double the number needed 6 months ago.
The usage patterns typically weigh against ad-supported "free" applications: except for a few cases (less than 5% of all programs), most applications aren't used often enough to ring up revenues. The study recommended: ""In other words, unless there's something inherent about the app that screams free, sell it."
The issue seems to be this: as the iPhone applications market created by App Store becomes more populated and more popular, it becomes less transparent: the sheer amount of limited, stylized information means that buyers in practice may be limiting themselves to the offerings on the App Stor Top 25 or Top 100 lists. You can browse by category, but you end up with exactly the same information about each application, all of it provided by the vendor.
Nokia is addressing this infoglut in its pending Ovi store, with applications for its Symbian-based mobile devices. Mobile users will be targeted with applications relevant to their location. And Nokia is setting up some social networking features that will let you see what your contacts and friends are buying on the Ovi store.
I'm not an eBay user, but my impression is that eBay and other sites such as Amazon, have created a range of tools that help prospective buyers make sense of what's being offered, information that's critical in the decision to put in a bid or charge your credit card. It will be interesting to see if Apple follows suit.
It's kind of a paradox, I think: Apple's iPhone success takes place on the open, free market. But the App Stor seems to be a much more centralized market in practice.