WHITEPAPER

Future App Stores ~

Appsolutely Fabulous

This whitepaper is an extract from:

Future App Stores

Discovery, Monetisation & Ecosystem Analysis
2013-2018

. . . information you can do business with

Mobile Apps ~ Appsolutely Fabulous

Mobile Apps ~ Appsolutely

Fabulous
1 Introduction
Throughout 2012, Apple and Google held an effective duopoly over the app distribution market, particularly in
Western markets, and this does not look set to change soon. They have both a significant number of users
accessing their stores and a vast number of developers creating apps for them yet they have very different
approaches to distribution (and monetisation) of content. Between them, Google Play and Apples App Store
accounted for nearly 40 billion downloads in 2012: to put this figure in perspective, three years earlier, in 2009,
the entire mobile app market accounted for less than 5 billion downloads.
However, as new players in this space attempt to overcome the barriers to entry during 20132014, Apple and
Google will have to adjust their strategies to ensure that their offerings remain competitive, responding to the
threats posed by Microsoft, Amazon and potentially - Facebook.
The Report will focus on the app-centric world within which smartphone and tablet owners live, a term which
has arisen given the fact that the primary use of a mobile device for a large proportion of people is to download
and interact with apps. These apps can then interact with the users device through the OSs (Operating System)
ecosystem, other devices, via cloud technology. Indeed, the increasingly social element of applications plays into
the hands of companies such as Facebook: the recently announced Facebook Home, currently only available on
Android, is viewed by Mark Zuckerburg as a move away from an app-centric world, to a more person-centric
one. This would see a users primary experience on their device as one which involves interacting with friends
from the outset not via an app. In fact, interacting with people via Facebook Home can be done when a device
owner is already interacting with an app.
In addition to this, Microsoft have continually cited their Windows Phone as a people-centric phone, which
integrates social-connectivity at the hub of the phone. Meanwhile, the transition to the current, app-centric world
has markedly reduced the influence of the MNOs, effectively cutting them out of the content retail space and
threatening to reduce them to a bitpipe role; furthermore, with the increasing ubiquity of Wi-Fi, even this
participation has become diminished.
As OSs (Operating Systems) become more fragmented, one might expect to see a move from developers towards
web, or HTML5 (Hyper Text Mark-up Language 5) based apps, as app creators seek to maximise the audience
for their product. This transition from native to browser-based apps can be advantageous to developers, as one
of the defining features for the various app stores is how open or closed they are as an ecosystem. For instance,
certain app stores have lengthy QA (quality assurance) processes, and/or may restrict certain content types from

Mobile Apps ~ Appsolutely Fabulous

being offered (eg Google Play does not permit gambling apps). Developers may thus look to create web-apps to
complement their app store offering, or to indeed bypass the app store altogether. The Report will establish
which players exist in the market for web apps and the benefits/disadvantages to creating a web app.
As the scale of apps on offer increases, the question of how consumers can find apps that are relevant to them
becomes more pertinent. App discovery is becoming a much more important field, with companies promising
ASO (App Store Optimisation) so that developers see their apps higher in search rankings. This in turn has created
a market for app discovery engines, such as AppGratis. This app offers free apps and discounts to help users
discover new content (at a cost to the developer), but was recently taken off the App Store; what does this imply
for discovery and promotion from both the perspective of the developers and app stores? In addition to this, as
competition intensifies, user retention becomes equally, if not more, important. Analytics have become important
to many developers who want to see who is using their apps and how, thereby allowing them proactively to tailor
future iterations.
This Report seeks to address the issues raised by these trends, and the implications that they have both for the
development of the app ecosystem and the players that inhabit it. Finally, it will provide detailed forecasts for the
mobile apps market across 8 key app categories.

2 The Market for Mobile Apps

In terms of the smartphone and tablet market, there are two key players who distribute apps to device owners,
namely Apple and Google. In addition to these players, stores such as Nokias and BlackBerrys also remain
popular with a strong user base; however players such as Microsoft and Amazon are now beginning to break into
this space. Furthermore, Facebook, whose presence on mobile devices continues to increase sharply (it now has
over 700 million active mobile users), poses a threat to such app stores if they can integrate their online app
distribution platform with the smartphone and tablet devices.
The two behemoths have been able to establish a vast market share which stands at almost 70%. They are
particularly popular in western markets, and the challenge is to now maintain or grow this market share. However,
in most developing markets, smartphone and tablet penetration is increasing rapidly; users do not currently live
in an app centric world, using OTT providers for messaging, etc, is not the norm yet.

2.1 Monetising the Mobile App

When Apples App Store first launched in 2008, of the initial 800 applications only 200, or 25%, were free at the
point of download. Since that point, the business models followed by developers have evolved given both (a) the
intensifying competition within the App Store and (b) the attendant evolution in enabled billing and monetisation
models, notably for in-app billing and advertising. This evolution was further catalysed by Googles open ethos.
Figure 1 shows the primary business models followed by key players within the app store market.

Mobile Apps ~ Appsolutely Fabulous

Figure 1: Mobile App Monetisation Models

Source: Juniper Research

2.2 Total Apps Accessed

It is important to restate at this point that, although browser-based apps are increasingly popular, we believe that
for the medium term at least in most cases they will be accompanied by a wrapper which, for the sake of
convenience and comprehension, will equate to a download. Hence, in these forecasts the term accessed applies
to both apps downloaded from an app store and apps accessed via the browser.
The total apps accessed shows that games are the most popular category of app in terms of sheer download
numbers. This is due to the nature of mobile games typically they are used to fill dead time, and as such have
short levels and users do not need to invest much time to understand a game. However, this also means that
when a user gets bored with a game, or frustrated as they find they cannot continue, they are often able to find
suitable alternatives within the app store, at little to no cost. Thus, engagement time per game is often extremely
low, with many being accessed no more than once or twice. This is in contrast to social communication apps, the
category with the highest number of users, where setting up a social networking profile often takes time; users
must write about themselves, add friends, upload pictures, etc. Or, in order to be able to use a messaging app, a
users friends must also, in many cases, use the app too. Hence, many such apps have extremely high levels of
engagement, with smartphone users regularly checking Facebook several times per day. It is factors such as these
which have led to the higher number of downloads for mobile games.

Mobile Apps ~ Appsolutely Fabulous

Figure 2: Apps Accessed on Mobile/Tablet Devices, Split by 8 App Categories, 2017

Games
Multimedia
Lifestyle
eReaders
Productivity
Healthcare
Social Comms
Finance
Source: Juniper Research

Order the Full Report

Future App Stores: Discovery, Monetisation & Ecosystem Analysis
2013-2018
Latest Research

This highly anticipated fourth edition report provides an absolute assessment of the market for

mobile and tablet apps. The report analyses the key differences and opportunities within the leading app
stores, and the opportunity for monetisation across different app categories. Furthermore, the report
determines the changing strategic direction of the leading app stores as the market evolves and
disruptive players enter.

Learn from expert analysis and strategic recommendations supported by interviews with key
players in the value chain including Amazon, Amdocs, Bango, Inneractive, Mozilla, Opera, Sencha and
Smartling.

Whats New in this Edition?

Country level data for USA, Canada, UK Germany, Japan and South Korea is available in both the
Top Level Interactive Forecast Excel and Ultimate Interactive Forecast Excel.

Forecasts by App Category conveniently providing the reader with top-line figures for Games,
Multimedia, Lifestyle, Social Communications, Productivity, eReader, Finance and Healthcare apps.
These forecasts are then split by 8 Key Regions.

The Total Addressable Market is derived for the first time providing a complete strategic view of
the mobile apps market.

Enhanced Forecasts including the user-base for each category and total user-base reached through
Juniper Researchs exhaustive methodology to eliminate any overlap between multiple device users.

Publication Details
Publication Date: July 2013

Mobile Apps ~ Appsolutely Fabulous

Author: Sin Rowlands
For more information please contact Jon King, Business Development Manager: Jon.King@juniperresearch.com
Juniper Research Ltd, Church Cottage House, Church Square, Basingstoke, Hampshire, RG21 7QW, England
UK: +44 (0) 1256 830001/475656 US: +1 408 716 5483 (International answering service)
www.juniperresearch.com