VAS Research Series

The Mobile
Application Market

The Mobile Application Market is a comprehensive market

report from Berg Insight analysing the latest developments on
the global market for mobile applications and app stores.
This strategic research report from Berg Insight provides you
with 110 pages of unique business intelligence including
5-year industry forecasts and expert commentary to base your
business decisions.

This report will allow you to:

Identify the key players in the mobile application value chain.
Benefit from extensive forecasts and statistical material.
Recognise the business opportunities in the mobile
application market.
Predict tomorrows most profitable monetisation strategies.
Learn about the market opportunity for mobile network
operators.
Evaluate the existing mobile app platforms.

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Berg Insights VAS Research Series

What are the key business opportunities for value added services in the mobile
industry? Berg Insights VAS Research Series is a unique series of analytical
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as mobile messaging, mobile Internet, mobile TV, mobile broadband or mobile
marketing. We put mobile VAS into a greater perspective, offering a realistic
approach and accurate forecasts.
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VAS Research Series

The smartphone trend is accelerating

the mobile application market
Software especially developed for mobile phones has been around
for well over a decade and before the term application (app) store
was popularized, distribution of mobile content and applications
was often realized through portals which were managed by network
operators. Operator portals had some success in selling mobile content but the ecosystem was at first unclear and did not attract enough
developers and users to really take off. The Apple App Store an
on device centralized store with easy to find applications and with
a simplified business model for developers, was later the disruptive
force that kick-started the market for mobile applications. The success was immediate and within its first week of operation, the App
Store accounted for 10 million app downloads. Today all leading
operating system providers and handset vendors have followed and
launched their own application stores.
The ecosystem around devices consisting of services and applications has today become an important influencing factor for users
when choosing handsets. Therefore, it is important for mobile platform vendors to achieve a prosperous mobile app ecosystem that
creates revenues for publishers and value for end users in order to
increase customer loyalty and sell more devices. Even though the
directly generated revenues in mobile app stores still are comparably
small, the importance of mobile apps is self evidential when observing the consumer interest in apps as well as the fact that apps attract
and generate revenues for a growing mobile community of software
developers, publishers, media owners and mobile ad companies.
In 2010, there were approximately 10 billion app downloads made
on all mobile platforms. Consumers are getting used to expanding
the functionality of their devices through apps and Berg Insight anticipates the number of app downloads to almost threefold year-on-year
in 2011. Even if featurephones are able to run apps, the increased
sales of smartphones and the rising popularity of apps are closely
tied together. In 2015, over 70 percent of all handset shipments will be
smartphones, building a large user base that will spur the number of
app downloads to reach almost 100 billion during 2015. The number
of app downloads per platform will gradually mimic the market share
for each mobile platform. However, some of the newer platforms,
such as iOS and Android, are much more app centric than older

platforms such as Symbian. Also, network effects in the symbiosis

between users and developers, reinforces the most popular platforms
and attracts both more developers and users. Berg Insight forecasts
that iOS and Android combined will serve over 62 percent of the total
app downloads in 2015. The Windows Phone operating system is
projected to be the third most popular application platform in 2015.
Berg Insight estimates that revenues from paid applications, in-app
purchases and subscription services so called direct revenues
reached 1.6 billion in 2010. Berg Insight forecasts direct app store
revenues to grow at a compound annual growth rate of 40.7 percent
to reach 8.8 billion in 2015. Apples iOS is the current leader in direct
monetisation of mobile applications and will keep the number one
position during the forecast period. In 2010, the Apple App Store generated revenues of 1.33 billion. In 2015 the companys app store is
predicted to generate 4.4 billion in direct revenues. The Android
platform is the second largest platform in terms of direct revenues
and generated 80 million during 2010 which will grow to almost
1.5 billion in 2015.
The market for in-app advertising took off during 2010 as a means
to capitalize on free apps. In-app advertising generated 300 million
representing 16 percent of the total app revenues during the year.
In 2011, app advertising revenues will more than double to reach
750 million. The in-app advertising revenues will increase throughout the forecast period and in 2015, in-app advertising is forecasted
to generate 3.5 billion corresponding to 29 percent of the total app
revenues. In-app advertising is more of a volume game and Android
will surpass iOS in 2012 as the platform that generates most in-app
ad revenues. Berg Insight predicts Android to generate over 1.2
billion in in-app ad revenues in 2015, up from 39 million in 2010.
The iOS platform generated 230 million in 2010 and is forecasted to
reach almost 1.0 billion in 2015.

This report answers the following questions:

Which mobile platforms offer the best potential for
monetising mobile apps?
How can mobile operators benefit from the mobile
application market?

Billion Downloads
100

80

Which will be the most important business strategies for

mobile applications?

60

What are the impacts of web technologies such as

HTML5 on the mobile application market?

40

Why is it important with a multi platform development

strategy?

20

How big is the revenue opportunity within the mobile

application market?

Year
2009

2010

2011

2012

2013

2014

2015

Mobile application downloads, billion downloads (World 20092015)

How can app developers minimize business risks?

Which are the leading mobile application stores?

Table of Contents

1 Introduction to mobile
applications
1.1 Background
1.1.1 App stores simplify distribution for
developers
1.1.2 Explosion in the number of apps and
app stores
1.1.3 Mobile Internet and the rise of the
mobile app market
1.2 Mobile application platforms
1.3 Mobile application categories
1.3.1 Gaming
1.3.2 Entertainment
1.3.3 Books
1.3.4 Communication
1.3.5 Utility and productivity
1.3.6 Mobile enterprise
1.3.7 Other categories
1.4 App usage
1.5 App discovery
1.5.1 Third party app directories
1.6 App store network effects

2 The mobile application
ecosystem
2.1 Mobile handset market overview
2.2 The smartphone market
2.2.1 Focus shift from devices to mobile app
ecosystems
2.2.2 Touch input and advanced sensor
technologies drives app innovation
2.2.3 Apps and improved hardware enables
smartphones to challenge PCs
2.3 Mobile application platforms
2.3.1 Android
2.3.2 BlackBerry OS
2.3.3 iOS
2.3.4 Symbian
2.3.5 WebOS
2.3.6 Windows Phone 7
2.3.7 Brew MP
2.3.8 Samsungs Bada platform
2.3.9 Java for Mobile Devices
2.4 Mobile network operators and the
app market
2.4.1 App markets reduce operators to
broadband providers
2.4.2 Operators launch their own app stores
to reclaim control
2.4.3 The Wholesale Application Community
2.4.4 Operator opportunities in the mobile
app market
2.5 Mobile app developers and
publishers
2.5.1 Gaming is the most popular app
category for developers
2.5.2 iOS and Android are the most popular
platforms for developers
2.6 In-app ad solution providers and ad
networks
2.6.1 Digital ad networks and in-app ad
solutions

2.6.2 Apple iAd

2.6.3 RIM BlackBerry Advertising Service
2.6.4 Microsoft Windows Phone 7/Microsoft
Advertising
2.6.5 Nokia Ovi Store in-app advertising
add-on
2.6.6 Google Admob

3 Mobile application stores

OS developer application stores

Android Market
Windows Phone Marketplace
Device vendor application stores
Apple App Store
BlackBerry App World
HP App Catalog
Nokia Ovi Store
Samsung Apps
LG World
Operator application stores
AT&T AppCenter
Bharti Airtel App Central
China Mobile Mmarket
Orange App Shop
Verizon V CAST Apps
Vodafone 360 Shop
Third party application stores
GetJar
Amazon Appstore for Android
Appitalism
White label application stores
Appia
Huaweis WAC enabled Digital
Shopping Mall Solution
3.5.3 Ericsson eStore

3.1
3.1.1
3.1.2
3.2
3.2.1
3.2.2
3.2.3
3.2.4
3.2.5
3.2.6
3.3
3.3.1
3.3.2
3.3.3
3.3.4
3.3.5
3.3.6
3.4
3.4.1
3.4.2
3.4.3
3.5
3.5.1
3.5.2

4 Mobile app store economics

4.1 Application store revenues

4.1.1 Revenue share models
4.1.2 Mobile app marketing
4.2 App store billing solutions
4.3 Mobile app pricing
4.4 Mobile application monetisation
strategies and business models
4.4.1 Paid apps
4.4.2 Freemium one free limited version
combined with one premium version
4.4.3 In-app payments
4.4.4 Subscriptions
4.4.5 Ad-funded
4.4.6 Marketing and brand apps
4.4.7 New channel to market
4.4.8 Bundle component
4.4.9 Attract a large user base and building
communities
4.4.10 Free apps
4.4.11 Mobile app business model trends
4.4.12 Choosing monetisation strategy

4.4.13 Cross platform development and multi

monetisation strategies reduce risks

5 Market forecasts and
conclusions
5.1 Market forecasts by mobile platform
5.1.1 Application download forecast by
mobile operating system
5.1.2 Direct revenues forecast by mobile
operating system
5.1.3 In-app advertising revenues forecast by
mobile operating system
5.2 Market forecasts by region
5.2.1 Application download forecast by
region
5.2.2 Direct revenues forecast by region
5.2.3 In-app advertising revenues forecast by
region
5.3 Conclusions and strategic advice
5.3.1 App stores is about successful
ecosystems
5.3.2 E-commerce, content and
subscriptions opportunities with
impediments
5.3.3 Business models and monetisation
5.3.4 Mobile platforms and cross platform
development
5.3.5 The mobile web, HTML5 web apps and
native apps

6 Industry players
6.1
6.1.1
6.1.2
6.1.3
6.1.4
6.2
6.2.1
6.2.2
6.3
6.3.1
6.3.2
6.3.3
6.3.4
6.4
6.4.1

6.4.2
6.4.3
6.5
6.5.1
6.5.2
6.5.3

Device vendors
Apple
Nokia
Research In Motion
Samsung Electronics
Mobile operating system vendors
Google
Microsoft
Mobile operators
AT&T
Verizon Wireless
Vodafone
China Mobile
Developers and publishers
Electronic Arts - EA Mobile and
Chillingo
Gameloft
Rovio
Third party in-app advertising
solution providers
Smaato
Amobee
Tapjoy

Glossary

VAS Research Series

About the Author

Johan Svanberg is a Senior Analyst with a Masters
degree from Chalmers University of Technology. He joined
Berg Insight in 2007 and his areas of expertise include
embedded connectivity and mobile applications.

telecom industry. We produce concise reports providing

key facts and strategic insights about pivotal developments
in our focus areas. From time to time we also perform
custom research assignments. Our vision is to be the most
valuable source of intelligence for our customers.

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