Apple responsible for 99.4% of mobile app sales in 2009 (Updated)

Apple still owns the mobile app market, which it redefined with the iPhone App …

Chris Foresman – Jan 18, 2010 7:30 pm | 83

The latest report from market research firm Gartner suggests that mobile apps are big business, and that business should only grow in the next few years. According to Gartner’s numbers and those reported by Apple, Apple completely owns this market, likely grabbing almost every one of the 4.2 billion dollars spent on mobile apps in 2009. Based on Gartner’s estimates and our own analysis, Apple could hold on to at least two-thirds of the market if current sales trends hold for 2010.

Apple first opened the App Store in July 2008, along with the launch of the iPhone 3G and the release of iPhone OS 2.0. Sales were brisk, with 300 million apps sold by December. After the holidays, that number had jumped to 500 million. Earlier this month, Apple announced that sales had topped 3 billion; that means iPhone users downloaded 2.5 billion apps in 2009 alone. Gartner’s figures show another 16 million apps that could come from other platform’s recently opened app stores, giving Apple at least 99.4 percent of all mobile apps sold for the year.

Chart: Gartner figures for mobile app sales and revenue

“As smartphones grow in popularity and application stores become the focus for several players in the value chain, more consumers will experiment with application downloads,” Stephanie Baghdassarian, research director at Gartner, said in a statement. “Games remain the number one application, and mobile shopping, social networking, utilities and productivity tools continue to grow and attract increasing amounts of money.”

Gartner’s predictions for 2010 are 4.5 billion apps sold, for a total of $6.8 billion in revenue. If Apple can merely maintain its current rate of about a quarter billion app sales per month, and revenue share tracks with market share, it stands to be responsible for 3 billion apps sales—67 percent—good for about $4.5 billion in revenue. Apple’s cut would be $1.35 billion, with developers taking the remainder. However, as Apple gains more users from sales of new iPhone models and possibly from an expected tablet, Apple could get an even larger share of the mobile app market.

Predictions for 2013, just a few years away, are even bigger—21.6 billion apps sold for a total of $29.5 billion revenue. The firm predicts that by then, 25 percent of the revenue generated by mobile apps will be from free versions supported with advertising. “Growth in smartphone sales will not necessarily mean that consumers will spend more money, but it will widen the addressable market for an offering that will be advertising-funded,” Baghdassarian said. That makes Apple’s acquisition of a mobile advertising firm seem like an even smarter move, just for the extra revenue alone.

The App Store model has become de rigueur on all the smartphone platforms, with RIM, Microsoft, Palm, and Google each building a similar way for developers to make apps available, and for users to find them and pay for them. Gartner warns that developers will have to carefully consider which platform’s app store is best to promote their app. Even with the hundreds of thousands of options that vie for users in the iPhone App Store, the numbers suggest that Apple remains most developers’ best bet.

UPDATE: A number of people have expressed concern that Gartner’s figure only count apps sold, and not free apps. Gartner’s press release indicated otherwise, and we verified with Baghdassarian that the figures include all apps, free or otherwise, distributed from every app store. According to Apple, it moved 2.5 billion apps, free or otherwise. We contend that the 99.4 percent figure is accurate.

To help visualize this figure, some readers requested an additional chart: