Last year, nearly 198 billion mobile applications were downloaded by smartphone-owners – ~18% more than the corresponding figure in 2016. To keep up with the high demand levels, the availability of apps is also spiralling rapidly. By December 2017, the total count of apps in the Google Play Store was in excess of 3.5 million. The Apple App Store, on the other hand, had 3.1 million+ applications (including games) in 2017 Q3. Given the high revenue potential of the global app ecosystem – more and more coders are taking up app development as a profession. At last count, the App Store had close to 500000 app-makers, while nearly 970000 developers were working on the Android platform. In today’s discourse, we will do a roundup of some interesting facts and trends related to mobile apps for 2018:
For all the speculation about the worldwide app economy slowing down as it enters early maturity, the revenue potentials of this sector are set to remain high in the foreseeable future. By the end of 2021, total revenues from mobile apps will edge close to the $190 billion mark – more than 2X the revenue figure in 2016. Not surprisingly, games will continue to grow in terms of adoption and profitability – with the share of gaming applications in the total app revenues rising from 23% (in 2016) to 32% (in 2021). In the United States alone, the ‘net-to-publisher’ app revenue will jump to $74 billion by the end of this decade – nearly a three-fold increase over $27 billion figure in 2015. Well-made, well-marketed, user-focused applications can be financially rewarding in a big way.
A recent Forrester report has revealed that less than 47% of the global population had access to smartphones in 2016. In 2017 Q2, the total smartphone shipments added up to ~366 million (Android 321 million; iOS 44 million) – and the market is expected to steadily grow over the next few years. By mid-2019, over 2.7 billion people will become regular-users of smartphones – with each person having 32-35 apps installed on their devices. Interestingly though, the share of the world population to own a smartphone will remain relatively flat – with minimal rise in percentage points on a YoY basis – till 2020. Revenues from smartphone sales have continued to soar – with $478 billion coming in from shipments in 2017 (in 2014, smartphone sales brought in ~$380 billion).
Note: In terms of profitability of the smartphone market, China takes top spot, with around 25% share of the total annual revenues. The United States comes in second.
Enterprise apps on the rise
By the latter half of 2017, more than half of all small businesses in the US had created their very own enterprise applications on the mobile platform. This trend is set to continue in 2018 and beyond, as more and more startup-owners/entrepreneurs realize the importance of having a strong presence in the mobile space – and the opportunities (engagement, leads, etc.) available here. Significant increases in sales and high-quality customer service have been the two biggest drivers behind the growing popularity of business applications. Among companies which do not have apps yet, many have plans to invest on them this year. Interestingly, nearly 48% of all companies prefer building their apps in-house.
Note: There is a direct correlation between the size of a business and the likelihood of it having an app. Companies with relatively young owners (18-34 age group) are also the most likely to invest resources on app development.
iOS and Android to remain (by far) the biggest platforms
Taken together, Apple’s iOS and Google’s Android make up nearly 99.6% of all smartphones in active use at present in the world. Android has a yawning lead over iOS as far as market share is concerned – although the gap has slightly shortened over the last couple of years. In the US, almost 66% of all new activations in 2017 were for Android – with iOS accounting for a relatively low 31% of activations. In general, iOS has the edge in the more developed nations in the world (by virtue of it being positioned as a ‘premium’ product) – and iPhone users are more likely to: a) have more disposable income, and b) spend more on apps, than their Android counterparts. Traditionally, iOS was always a fair way ahead in terms of revenues – but that advantage is also gradually disappearing. In 2017, the revenue from the App Store was $40 billion – which is roughly equal to the revenue from Android applications downloaded from Play Store and other third-party Android stores (Mobogenie, Aptoide, Amazon Appstore, etc.). It has been estimated that this combined Android app revenues will rise to $78 billion in 2020 - comfortably more than the projected $60 billion earnings from iOS apps.
Facebook continues to be the most popular app
Among the young crowd (age 18+), Facebook is easily the most popular mobile application with a whopping 81% penetration rate. Facebook Messenger, with 68%, is also at the third spot – with the YouTube app (70% penetration) sandwiched between the two. Instagram is in sixth, while Google Play and Gmail occupying the eighth and ninth spots respectively in popularity charts for 2017. However, in terms of usage, it is Amazon that users in 18-34 age group (millennials) deem to be the most important, followed by Gmail and Facebook. Whatsapp, somewhat surprisingly, is in the ninth slot – and Snapchat is not in the top-10 on either list. Clearly, while the demand for social networking apps is high – millennials ‘cannot live without’ the more functional, utility-based applications.
Games attract the most downloads, but what’s next?
In January 2018, mobile games have accounted for 1 out of every 4 downloads from the App Store. Business apps, with nearly 10% share of the downloads, is the second-most popular category on the platform – with the next three positions taken up by education/learning apps, lifestyle apps and entertainment apps (travel apps, with a measly 3.9% share in downloads, is at the seventh spot). In the Play Store, however, productivity tools have the biggest reach to end-users, while travel and local applications also have an impressive ~95% reach (placing the category in the fourth position). The other most popular app categories on the Android platform are communication and video players/video editors. The demand for business apps is much lower on Android in comparison with iOS – while shopping applications, for all the hype around them, also have lots of scopes to expand their popularity and adoption.
Digital media rules, and mobile apps score over tablet apps
The average adult in the United States spends nearly half of the day (12 hours+) interacting with different forms of the media. Digital media is the clear winner here – with people spending approximately 5.8 hours per day on computers, smartphones (excluding call operations) and other connected ‘smart’ devices. At a more micro-level, mobile devices – with a 3 hours+ daily engagement plan, is easily ahead of desktops/laptops (with sub-2 hours engagement rates). Once again, it is the group of millennials who are the heaviest users of mobile digital media – and users in this age group have a clear preference for smartphones over tablets (in a month, 93 hours are spent by an individual user with a mobile app. In comparison, the interaction time with a tablet app is only 27 hours). While this preference is much less pronounced for older users (those above the age of 65 spend 42 hours with mobile (non-voice) and 23 hours with tablet, on average) – the mobile platform is still the chosen one.
Note: As the average user starts getting on in age, (s)he is likely to prefer using slightly larger, two-handed devices.
Ad-spending and ad-blocking
By 2021, the total ad spending on the mobile-platform will breach the $200 billion mark – marking a three-fold increase from the current figure. Already, more than half of the total expenses for digital media advertisements is contributed by the mobile platform – and this share will continue to grow rapidly. Nearly 500 million smartphone users regularly use different types of ad-blocking software on their devices. Researches have shown that there has been a ~90% increase in the adoption of mobile ad blockers over the last couple of years. The challenge for app developers lies in creating and displaying such ad content that will capture the viewers’ attention, without disturbing them in any way.
Driven by Android Instant Apps, app streaming to become more mainstream
App streaming, when done well, can deliver a great deal of convenience for app users. The latter can quickly check out/use a set of features in the app they need – without having to go through the whole hog of actually downloading/installing the software. Android Instant Apps, announced at the Google I/O 2017, have shown the way in this domain – and at present, the technology is supported by well over 500 million handsets. Many third-party Android app developers are also coming up with ‘Instant’ versions of their applications (in the Play Store app listings, Google has added a ‘Try it now’ button). By 2020, there will probably be more than 100000 Android applications available for such ‘instant previews’. One thing is for sure: more and better app streaming options will help in bringing down the much-talked-about ‘app abandonment’ problems.
Core group of apps
It is fairly common for a smartphone to have 25-27 third-party apps installed on it. A recent US-based study found that, 62% users in the country had at least 20 applications installed on their phones - and they used ~30 apps in a month. However, as far as actual usage is concerned – the average user spends nearly 49% of his/her ‘mobile time’ with only one app, and 77% with his/her core group of top three applications. Broadening the results further, ten apps take up around 96% of the time of the device-owners. On the other hand, there are many apps that are never used after being downloaded, while 25% of all newly installed apps are abandoned after single use.
Growth in IoT to be a major factor
Back in 2015, the total number of connected devices was just a shade over 15 million. Cut to 2020 – and that number will have doubled, with the count of smart IoT gadgets expected to reach ~75 million by 2025. Right from smart homes and autonomous cars, to security, education and healthcare – IoT-based applications are finding rapid adoption in various domains, and developers are making a definite attempt to seamlessly integrate the technology in their newest apps. Before the decade draws to the close, IoT will become a $456 billion industry, with the CAGR for the 2016-2020 period hovering around the 29% mark. This year, it can be reasonably expected that IoT will play an important role in many instances of mobile app development. Smart agriculture is yet another field where the opportunities are huge.
Note: Semtech’s LoRaWAN has emerged as a key driver of IoT technologies worldwide.
12. Location services will be on the rise
Any decent smartphone offers fairly accurate location-based services (LBS), or GPS. Apart from helping the users with general navigation, the technology is also being used by third-party developers to come up with diverse types of applications that deliver real-time locational information. Although the adoption rate of Beacon technology (iBeacon) had been flat (at best), apps with built-in GPS support are fast gaining in popularity. Location services are, in fact, core elements in many travel apps, mobile security tools, retail shopping apps, payment channels, mobile indoor mapping tools, and the like. The overall GPS tracking market will grow exponentially between 2017 and 2023 – and more and more apps will depend upon it for full functionality.
Note: The only point of concern over here is the greater battery drain caused by constantly using GPS. It will be interesting to see if the OEMs are able to offer a viable solution for that.
13. How much are the app developers making?
While the potential revenues from top-ranking apps can be amazingly high – both the iOS and the Android marketplaces are remarkably ‘top-heavy’ when it comes to earnings. Around 33% of developers do not manage to generate even 10000 downloads of their applications, and nearly 57% of them have sub-$1000 monthly earnings. The top-heavy nature of revenues in the app marketplaces is best accentuated by the fact that only 25% iPhone developers, and 16% Android developers, manage to earn northwards of $5000 every month. It is also worth noting that 3 out of every 4 developers prefer working on the Android platform over iOS.
14. VR/AR/MR in app-making
In their bid to come up with unique products and stay a step ahead of the competition, developers are constantly trying to come up with apps that deliver more immersive, engaging experiences. While virtual reality has been in the picture for some time – augmented reality and mixed reality are the technologies that are likely to take the standards of mobile app development a couple of notches higher in 2018 and beyond. The recent IDC report showed that this year, the total spending on VR/AR will be just a tick under $18 billion by 2020. The so-called ‘reality apps’ will be changing the way in which we interact with software systems as well as our smart devices. Pokemon Go showed the way – and 2018 might well be the year when AR finally comes of age in the field of app-making.
15. Why do people uninstall apps?
Given the alarmingly high rates of app-abandonment, it is extremely important for developers to know what exactly causes people to turn away from any software application. As mobile technology is becoming increasingly advanced, the concerns over app security is growing – and according to Gartner estimates, a whopping 75% of applications do not satisfy even the most elementary security parameters. Apart from this, other common causes for app removals include technical glitches, unavailability of updates, and an ad overkill (disrupting the overall UX). Given the sheer variety of apps available in the stores, it is also not really difficult to find similar applications (competitors) with better features and functionality. If an app takes up too much of memory space and/or is a battery hog – it is bound to fail as well.
Note: If the ‘need’ for an app is not strong enough, a person can even forget that (s)he had downloaded it. Too many notifications is yet another no-no, while problems in in-app navigation also cause many people to get rid of certain apps.
With the arrival and growing popularity of Siri, Amazon Alexa and Google Home (Apple HomePod is also in the offing), personal home assistants in particular, and voice technology in general, are fast coming into focus. 2018 should witness a meaningful rise in the number of voice-enabled mobile apps, making things more convenient for final users. The importance of delivering optimized user-end experience is also becoming more important at present than ever before. The jury is still out on whether the global app market is past its peak or not – but it can be safely said that this market is not going to become completely mature and static anytime soon.
Innovations and new technologies?