Is The Mobile App Market Nearing Saturation? No, And Here’s Why!

By | October 5, 2016
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Te global app market is far from being fully saturated

 

In the United States, a May survey (by Nomura) revealed that the total volume of app downloads had gone down by 20%. In general too, there was a decline in the year-on-year app download figure in the first quarter of 2016. What’s more, the International Data Corporation (IDC) has forecasted that the number of new app installations would grow at sub-10% annually, for the next 4-5 years. All of these apparently suggest that the global mobile app market is reaching towards saturation. However, the truth is far from it – and over here, we will highlight certain key stats and figures to show that app development is likely to grow further in the foreseeable future:

  1. Rise in app store downloads

    The combined number of downloads from all the mobile app stores is projected to reach 285 billion by 2020, according to the recent App Annie report. The growth will be mainly driven by a two-fold increase in the global user-base, between 2015 and 2020. Both Apple App Store and the Google Play Store will register steady (if unspectacular) increases in the app download figures. The developing economies will have a strong role in shoring up the app download and usage levels over the next half a decade or so.

  2. A $77 Billion Industry

    That’s what the international mobile app development sector has been predicted to be, by the end of 2017. The total number of mobile devices in use already outstrips the world population count on a 1:1.4 ratio, and 70% of the global population will become smartphone-users by 2020. In addition, over 45% of app-users will actually spend money on their mobile applications. From both the download as well as the revenue fronts, the app market seems to be in good health.

  3. Money matters

    One of the biggest signs of a market nearing saturation is dwindling annual revenue figures. No such trend is expected to be seen in the worldwide app market. In fact, after a relatively modest 123.8% revenue growth in 2016 over the 2015 figure ($50.9 billion vs $41.1 billion) – the total revenue from the app industry will breach the $100 billion mark in 2020, nearly double of the current value. Revenues from both iOS and android applications will show increases.

Note: With the total count of Android devices increasing every quarter, it is expected that the platform will overtake the gross revenue figure of the Apple App Store by mid-2017.

  1. Increase in smart device usage

    9 out of every 10 individuals in the US use mobile phones. On average, 6 out of these handsets are smartphones. The total number of smartphone shipments in 2015 was just a tick under 1425 million units – bringing in a whopping revenue of $426 billion. In 2016, China alone accounted for the sale of nearly 540 million units of smartphones. There is no way that demand for smart mobile devices is stalling – and that, in turn, rules out the possibility of app market maturity.

  2. Proliferation of wearable tech

    Mobile apps are only a section of the global app development industry. The strong presence of smart wearable gadgets also has to be taken into account. Apple Watch changed the face (quite literally!) of wearables in 2015, and since then – the demand for apps customized for wearable devices has been on a steady upward spiral. By September, the number of Watch apps had climbed to 10000+, and in 2016 Q2, the Cupertino company shipped more than 1.6 million units of the smartwatch (amidst rumors of declining interest in Apple products). Other leading wearable tech manufacturers, like LG, Samsung and Fitbit are also doing well. Most mobile app companies have started working on the wearables platform – and there is absolutely no dearth of projects.

  3. Are people getting bored with apps?

    If you thought that the novelty factor of mobile applications is wearing off…well…figures suggest quite the opposite. Nearly 69% smartphone-owners actually use applications after downloading them, and 57% people interact with their recently downloaded apps on a daily basis. The average number of applications present on a smartphone (including native apps) is 26 – and they are used with varying frequencies. The app boom that kickstarted in 2008 might have lost some of its momentum, but app download and usage figures have not slowed down.

  4. Difference between ‘saturation’ and ‘maturity’

    At this point, it would be prudent to highlight that ‘app market maturity’ and ‘app market saturation’ DO NOT mean one and the same thing. For sure the app market has become more mature than before – with users becoming more and more choosy about the applications they are likely to use and retain. In June, it was found that American smartphone users, on average, did not install any new applications, while on a global basis, 1 out of every 4 newly downloaded apps are deleted/abandoned after single usage. These are all signs of ‘market maturity’, and not ‘market saturation’ – which would have meant that app developers are no longer interested in making new software, and end-users are not bothered about installing new applications. Now that is certainly not the case!

  5. Expected spurt in the popularity in mobile games

    Mobile games are already strong, and they are expected to grow even stronger in the next few years. A report from Deloitte Global has indicated that the projected revenues from mobile games ($35 billion) in 2016 will be more than the revenues from console games and PC games ($28 billion and $32 billion respectively). From a slightly different viewing perspective, mobile games are expected to show a 20%+ increase in revenue this year over the 2015 figure. In the same time span, PC games have grown by a measly 5%. Mobile is all set to become the highest revenue generating platform for game developers.

Note: The average revenue per game will, however, remain low on the mobile platform. The revenue/game is the highest on consoles ($4.8 million), while PC games ($3.0 million on each game) occupy the second spot. Mobile comes in a distant third, with a $40000 revenue-per-game figure.

  1. Greater adoption of mobile apps for business

    In April, less than 1 out of every 5 small businesses in the world had their own mobile apps. That figure will be inching towards 48% by the end of 2017 – as companies start to realize the importance of having a custom app for business growth, in addition to mobile-friendly websites. It has been forecasted that by next year, nearly 70% of business traffic for corporate houses will be from the mobile platform – a far cry from 2012-13, when only 10% traffic was generated from business applications. The key factors behind the rapidly increasing demands for mobile business apps include delivering a better customer experience, generation of more sales leads and improving brand presence in the market. If the app market had already been saturated, this trend would not have been present.

  2. Innovations galore

    Let’s just say that app development – instead of stalling – is evolving faster than ever before. Industry 4.0, more commonly known as Internet of Things – which involves connectivity of smart devices for greater user-convenience – is set to go big in the next few quarters. Professional app developers are also increasingly getting projects based on virtual reality/augmented reality. Apps for smart automobiles has not yet peaked, and this sector is also expected to show growth in future (the phase after the launch of Apple Car will be interesting). As already mentioned, wearable technology is picking up pace across the world. There is demand for app development from all of these ‘new sources’ – and the demand is only likely to grow stronger.

  3. Mobile apps vs Mobile web

    Apps win this battle hands-down. More than 30 hours in a month is spent by an average user while interacting with the 20-odd applications on his/her smartphone. According to monthly usage reports, men and women are almost equally engaged to mobile applications. Nearly 90% of the total time spent with handsets is spent on using apps, while only 10% go to using the mobile browser. It’s still a ‘world of apps’ for iPhone and Android phone-owners – there are no two ways about that.

  4. Rising demand for APIs and cloud-driven apps

    People love using apps that are secure, scalable, consistent, and offer smooth access to cloud services. At present, almost 76% users prefer to install applications that have a strong backend support. This, in turn, explains the remarkable rate of growth in the number of application program interfaces (APIs) – the software tools that allow apps to access web resources – in the last couple of years. By the end of 2016, there will be more than 30000 APIs available, a ten-fold increase over the 2010 count. The API economy is well and truly booming, and it is pulling up the usage of cloud-based mobile apps with it.

  5. Growing use of cross-platform tools

    While myths about the slowdown in app markets go on, third-party developers are increasingly taking to cross-platform development tools like PhoneGap, Xamarin, React Native and Appcelerator – to churn out high-quality applications that work on both iOS and Android. The growth in agile development methods and the need to shorten the ‘time-to-market’ are key factors behind the popularity of the cross-platform tools.

Note: Big data applications can be used on any mobile platform. For creating such apps, developers generally use cross-platform frameworks and tools.

       14. Mobile commerce to take off in a big way

By the end of last year, nearly 1 out of every 5 commercial transactions happened via smartphones or tablets. While opinions will remain polarised over the success of Apple Pay and Android Pay – there is no scope of doubting that the number of users migrating to NFC-powered contactless payment methods is increasing every quarter. As a result, the demand for apps that integrate m-commerce features is also increasing fast. The fact that more and more new industries (for instance, healthcare and education) are witnessing extensive mobile app usage also nullifies the so-called ‘saturation theory’.

By June 2016, the Apple App Store had 2 million applications. At the same time, around 2.2 million apps were present in the Google Play Store and 670000-odd apps were there in the Windows Store. Along with the rising availability of apps, there are robust forecasts about app downloads and revenues from 2017 to 2020. The latest tech innovations have also fueled the growth in demand for apps and APIs. Yes, the app development market has entered into the ‘early maturity’ stage and the growth rates are nowhere near the levels at the turn of the decade – but it is certainly not nearing saturation. Not even close.

 

 

Hussain Fakhruddin
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Hussain Fakhruddin

Hussain Fakhruddin is the founder/CEO of Teknowledge mobile apps company. He heads a large team of app developers, and has overseen the creation of nearly 600 applications. Apart from app development, his interests include reading, traveling and online blogging.
Hussain Fakhruddin
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