January 18, 2011 at 10:20 am

Report: Independent Stores, Not iTunes and Android, Will Distribute Most Mobile Apps

Will small, independent app stores really dethrone official sources like iTunes and Android Marketplace by 2014, as this study claims?

The world is already too full of specific predictions, as market intelligence analysts compete to divine precisely what percentage of which will change by whatever percentage by whenever.

Still, Dallas, Texas market research firm MarketsandMarkets recently peered into its crystal ball to find in a study released on Tuesday that the worldwide market for mobile phone apps will balloon to $25 billion by 2015, with Apple claiming 20.5 percent of that. Meanwhile, Europe will take over from North America as the biggest mobile app market in the world, revenue-wise, while small, independent app stores will become the dominant way in which apps are sold worldwide, rather than official app stores such as iTunes or Android Marketplace.

Today, the report found, approximately 3/4 of all downloaded mobile apps come from the official, so-called “on-deck” mobile app stores, while about 1/4 comes from “off-deck” stores that don’t have to give a percentage the phone’s manufacturer or carrier. This report found that by 2015, however, consumers will download more apps from third-party, “independent” app stores than from those official app stores, which could ultimately raise the price of your next smartphone (more on that below) while giving you greater choice in app stores:

“The off-deck mobile applications segment is expected have a faster growth in the future, owing to lowering of entry barriers and faster establishment of new independent stores. It is expected that by the end of 2015, the off-deck mobile application stores will just surpass the number of downloads from on-deck stores.”

What does this mean for you? Well, for one, it could get harder to find the best mobile apps for your phone, because they probably won’t all exist in the same place (iTunes possibly excepted, for iPhone users). It could also mean that even if you stick to the official stores, your phone’s performance could be affected by viruses and other malware hiding inside apps installed by other people who use the same cell network — the same way other people’s virus-infected computers affect your network performance by clogging it with denial-of-service attacks and the like.

In what is hopefully not an early example of the dangers of these third-party mobile app stores that are apparently set to become the dominant model, Lookout Mobile Security found “sophisticated” malware hiding inside of innocent-looking Android apps on a third-party Chinese app market. This move to independent app stores, while good for the overall “app economy,” might not be good for cellphone network security or performance.

On the other hand, perhaps the trade-offs (cheaper apps and the ability to install software even if it’s not approved by Apple or another company) are worth it. At this early stage, it’s too tough to call.

And that brings us back to MarketsandMarkets predictions. As easy as it is to poke fun at the idea that anyone can really know the future with such a degree of precision (“Apple will own precisely 20.5 percent of the mobile phone market by 2015!”), the firm cites several foundations for these predictions:

  • Phone networks are improving.
  • Companies are restructuring the way they share app revenue between handset manufacturers, OS developers, application developers, independent vendors, and network operators.
  • Mobile data is getting cheaper.
  • More people are buying smartphones.
  • Advertising has boosted and will continue to boost the growth of free mobile apps.
  • Business-oriented apps, and apps geared at specific vertical industries, have hampered mobile apps’ growth to date, but 4G and “superior content delivery technologies” will allow them to be developed.
  • India and China have “emerged as mobile applications hotspot[s]” as 3G spreads and consumer electronics spending increases.
  • In more-saturated Europe and North America, mobile app adoption is increasing in part due to wars between carriers and their resulting subsidization of smartphone hardware — the same subsidization they hope to defray in part by collecting a percentage of revenue from official app stores, which will wane if this study is correct. In that case, as some of the basis for those subsidies disappears, smartphones will grow more expensive relative to other goods as we approach 2015.

(via TechCrunch)