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Mobile apps market to be worth $25 billion by 2015

Image used with permission by copyright holder

If you hate the expanded role of apps in smartphones, the next five years are gonna be brutal. A new study by MarketsandMarkets predicts that the global apps market will swell to about $25 billion in annual revenue by 2015, growing at a compound annual growth rate of 29.6 percent from now until 2014. The growth will mostly come from the high adoption rate of smartphones, proliferation of high-speed 4G services, and falling data costs in the next five years. Apps made $6.8 billion in 2010.

The power of the App Store

The report shows the intense impact that the iPhone App Store had on the cell phone apps market. In 2007, there were 450 million global app downloads. The App Store was launched in July of 2008. There were about 1.1 billion downloads that year, totaling $1.49 billion. In 2009, downloads skyrocketed to 6.44 billion and revenue grew to $4.51 billion. The App Store reached 2 billion downloads alone within its first year of operation and changed the market for apps. While most apps were downloaded through cellphone carrier portals in years prior, Apple’s success has changed the entire market. Now handset manufacturers, operating system makers, and a growing number of third parties run most app stores.

However, Apple’s success has also come at a cost. While the revenue from apps is expected to increase at 29.6 percent, the number of actual downloads will grow much faster, compounding at 64.2 percent until 2015. This is mostly due to reductions in average selling price of apps which will drop from $0.57 in 2010 to $0.18 in 2015 (many apps are free and skew these numbers).

MarketsandMarkets expects the Apple App Store to retain a 20.5 percent share of the market through 2015, though that’s an awfully long ways out to predict market share. Could anyone have predicted the meteoric rise Android went through in just a year?

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