2

APPS

2.1 Overview
Apps, short for computer applications or application software, have expanded far
beyond the consumer marketplace into a tool for marketers. When consumers
download apps onto their smartphones or on social networking sites, their engagement
with the apps provides marketers with useful insight into consumer behavior.
Consumers choose to download apps to their computers or mobile devices, which
means they’ve actively sought out the tools and features.
There are novelty apps, like the virtual lighter from Zippo, and utility apps, such
as device power managers and GPS tools. From Gap’s StyleMixer to Pizza Hut’s
create-a-pizza to Stanley Works’ iPhone App that turns the device into a level, there are
apps for almost anything imaginable.
Many apps are free to users; companies make money selling apps, selling ads
within apps to be integrated, and selling digital goods used in apps.
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“It's happening with dizzying speed. Just two

years ago, almost none of this existed. Apple's
App Store, the most popular destination for
mobile-phone programs, was launched last
summer. Now there are more than a dozen rival
stores, and at least 100,000 apps have been
created. Some startups that staked their claim
in the app economy have become large,
lucrative businesses in just a few months. Two-
year-old Zynga, which makes popular game
apps, is already profitable, with more than $100
million in revenues. By comparison, Google
didn't start making money until its third
year–and still had less revenue.”

BusinessWeek, 11/2/09
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2.2 Market Assessment
Yankee Group (www.yankeegroup.com) estimates 2010 revenue from U.S.
mobile apps at $1.6 billion.
Juniper Research (www.juniperresearch.com) has estimated the current apps
market at $1 billion, and has forecast it to top $4 billion by 2012.

_________________________________________________________________

“These are such early days, no one knows

exactly how big the app economy is. Analysts
figure it’s at least a $1 billion market today,
headed for $4 billion by 2012. Not bad for a
brand-new business.”

BusinessWeek, 11/2/09
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2.3 Use Of Mobile Apps

According to the Smartphone Intelligence Report (April 2009) by Compete
(www.compete.com), percentages of users downloading various types of applications to
smartphones are as follows:
• Games: 37%
• Music: 28%
• Entertainment: 25%
• Weather: 24%
• Navigation: 21%
• News: 18%
• Social networking: 16%
• Utilities: 16%
• Business: 13%
• Travel: 12%
• Productivity: 11%
• Sports: 11%
• Education: 9%
• Photography: 9%
• Books: 8%
• Healthcare and fitness: 8%
• Lifestyle: 8%
• Reference: 8%
• Other: 4%

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 The following are other findings of the survey:
• Of all apps users, 44% have downloaded 1-to-5 apps; 14% have downloaded
6-to-10 apps; 27% have downloaded none.
• Of those who have not downloaded apps, 41% said it was because they did not
need any; 33% said it was because they didn’t want to spend the money.
• Among app users, 28% have spent $5.00 - $9.99 on apps; 27% have spent
$2.00 - $4.99; 21% have spent 99¢ - $1.99; 5% have spent $50.00 or more.

The number of smartphone users accessing mobile-application stores is roughly

a fourth of the projected 100 million users and is largely comprised of only iPhone
users, according to In-Stat (www.instat.com). According to David Chamberlain, a
principal analyst with In-Stat, the number of users accessing mobile-application stores
with their smartphones will increase four-fold by 2013.
Nielsen’s App Playbook survey found smartphone users most likely to download
apps directly from their mobile carrier. In part this is because most apps are not
available across platforms.
Among all mobile apps stores, the Apple Apps store is the most popular. In late
April 2009, the one billionth app was purchased from the Apple Apps store. According
to Gartner (www.gartner.com), Apple was responsible for 99.4% of mobile apps sales in
2009. The App store opened in April 2008–along with the launch of iPhone 3G.
Though the Apple Apps store will continue to maintain its hold on the mobile
apps market, the launch of a significant number of Android devices in the latter part of
2009, which drove its market share to 5% at the end of the year, set Android apps on a
promising trajectory for 2010.

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