A new study from Chetan Sharma Consulting claims that the market for apps will skyrocket to $17.5 billion by 2012. The independent study, commissioned by the world's second-largest app store GetJar, predicts that the number of app downloads will explode from around 7 million in 2009 to over 50 million by 2012.
My PCWorld peer Jared Newman takes exception to the study--noting the apparent bias of an app store declaring the unrivaled success of app stores. However, Newman also points out that this alone does not invalidate the study. There are some other potential issues, though, such as the distinct difference between platform specific apps, and the growing trend of mobile web apps which can be leveraged across multiple platforms.
Regardless of the accuracy of this particular study, it is hard to ignore the success of the apps business model. Three years ago most people hadn't heard of an app, and now there are hundreds of thousands of apps, and a multi-billion market that levels the playing field for smaller companies, or even individual developers to go head-to-head with larger competitors.
The learning curve is smaller and the barriers to entry are less. App development brings back the sort of pioneering entrepreneurialism that existed for full-blown software development during the 80's. Rather than requiring millions of lines of code, and development teams of a size rivaling blockbuster movie production, individuals can "dabble" in developing and whip up an app in their spare time.
Of course, businesses have tight IT budgets and are reluctant to invest hundreds of dollars even for established software from respected vendors--like purchasing the latest version of Microsoft Office, or Adobe Photoshop. If the market balks at paying hundreds of dollars for those programs, you can certainly expect that the market will not be willing to invest much in unknown apps from unknown developers.
That is where the genius of app economics comes into play. Business professionals are hesitant--to put it mildly--to invest $30, $60, or whatever for software. Often, there is no way to truly experience the software and determine if it will meet the needs it is purchased to fill until after it is bought and installed--at which point the EULA kicks in and it is difficult, if not impossible, to return for a full refund.
However, one dollar is a no-brainer. People spend one dollar without thinking twice. It's only one-fourth the cost of a venti, double-shot, half-caf, no soy, beverage at the corner coffee shop. It's a candy bar--OK, maybe a king-size candy bar depending on where you shop. The bottom line is, one dollar is disposable, while $30 is an investment.
That mentality--the philosophy of the dollar--is the foundation of the success of apps. There are studies and reports on the number of apps sold, but one thing that they fail to consider is how many of those apps ultimately go unused or are discarded completely.
App economics are based on volume. With millions of smartphone users out there, it isn't too difficult to find 10,000--or even 100,000, or possibly a million--who are willing to part with a dollar to check out an app and see if it has any value for them.
Apps may not become a $17.5 billion market by 2012 as this particular study predicts--especially not platform-specific apps. But, taken as a whole, apps represent a large market segment and a significant opportunity for the foreseeable future.