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Rivals nibble into Apple's app store revenue, report says

Sales to iPhone and iPad users still claim an 82.7 percent market share, IHS Screen Digest says

By Ralph Jennings, IDG News Service
February 16, 2011 03:18 AM ET

IDG News Service - Apple held on to its huge lead in global mobile phone applications last year due to its simple billing system but will give up much of that ground by 2014, market research firm IHS Screen Digest said in a report.

The Apple App Store, which opened in 2008 and sells largely to iPhone users, earned US$1.8 billion in 2010 for 82.7 percent of the total market despite hardware advances by rival smartphone makers, according to the report released on Wednesday. The total market for apps was worth $2.2 billion last year, up from $828 million in 2009.

"Apple...has been able to maintain advantage by leveraging its tightly controlled ecosystem," IHS mobile media analyst Jack Kent said in the research note.

A "trusted, integrated and simple billing service via iTunes,” lies at the core of that ecosystem, Kent said.

Apple's release of the iPad last year boosted revenue as apps for the tablet PC cost more than those sold for iPhones, the report said.

But Apple's mobile applications share declined from 92.8 percent in 2009 as competitors ate away at the market. That trend will continue, leaving Apple half the market share by as early as 2014, Los Angeles-based IHS said.

Applications -- essentially mobile device software -- for Nokia, Research in Motion's BlackBerry models and Google's Android led the non-Apple market last year. RIM ranked No. 2 and Nokia came in third place.

"Apple’s competitors, despite their struggles, managed to make some market share inroads in 2010," the report said.

Android Market saw revenue go up a particularly steep 861.5 percent last year to take 4.7 percent share of mobile application store revenue, IHS said.

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