Worldwide mobile app market hits $34 billion

New IDC report says market will keep growing, but slowly, and it will be dominated by large companies

Worldwide mobile app market hits $34 billion

Remember a few years ago when everyone and his brother was scrambling to build a mobile app in a frantic gold rush to get rich quick? Well, there was plenty of real gold in them thar virtual hills, but as in most gold rushes, only few people actually struck it rich.

Similarly, over time the nimble advantages of the early online prospectors have been overtaken by the giant companies that now largely own the digital world.

At least, that’s my takeaway from IDC’s new Worldwide Mobile Applications Forecast, 2016-2020 study. According to the IDC research, “mobile device users installed nearly 156 billion mobile applications worldwide in 2015, generating $34.2 billion in direct (non-advertising) revenue.”

IDC predicts that growth will continue, but more slowly, topping 210 billion downloads worth almost $57 billion by 2020. Driven by market maturation, we’re likely to see “annual install growth fall into the single digits over the second half of the forecast,” with a five-year compound annual growth rate of 6.3 percent, IDC noted.

Winners and losers

Don’t think all that cash will be evenly distributed, either. First of all, even as iOS’s share of global installs fell 8 percent to just 15 percent of the total, Apple’s ecosystem accounted for an amazing 58 percent of global direct app revenue in 2015, up a whopping 36 percent from 2014. That counter-intuitive result will continue, IDC said.

“Apple is expected to continue outperforming Google Play in terms of revenue generation,” the organization said. “However, both ecosystems are more than sufficiently established to sustainably attract developers.”

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But which developers have a puncher’s chance of succeeding in today’s mobile app market? The answers are complicated, but the big guys are best positioned.

“Facebook's moves to incorporate news and other interests into its experience will likely pull traffic and install volumes away from discrete apps,” warned John Jackson, IDC Research Vice President, Mobile and Connected Platforms, in a statement.

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According to Jackson, though, the bigger issue is that “preoccupation with download/install volumes and associated direct revenue may miss the thrust of changes in the mobile marketplace. Facebook and Google continue to dominate mobile ad spending thanks to the scale and sophistication of their network effects.”

And if selling your cute little app against the power of Facebook and Google doesn’t sound daunting enough, there’s more trouble on the horizon.

It’s a bot’s life

I’ve been thinking a lot recently about the rise of chat bots and the new-ish idea that we’re already entering the post-app economy. I think that’s a little premature, and chat bots have their own issues, but the competition is real.

“The emergence of 'bots,' which seek to automate interactions in a contextually infused way, are another in a series of examples of value being created above the OS layer and even above the app," Jackson said.

Apps aren’t going away any time soon. Fifty-seven billion dollars is hardly pocket change, and plenty of markets would be thrilled to grow 6.3 percent annually for five years. But is seems increasingly clear that the free-for-all days when anyone with a clever idea and decent programming skills could make a fortune in the mobile app market are pretty much over.

Maybe it’s time to start working on that awesome chat bot you’ve been thinking about.

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Copyright © 2016 IDG Communications, Inc.

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