Apple and Google to Continue App Reign as Market Grows Exponentially

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As the app craze grows stronger, a new report predicts that Apple and Google will continue to dominate the mobile application space for many years to come, maintaining more than 75% revenue share in 2017, as the market grows into a multi-billion dollar industry.

According to market-research firm Strategy Analytics, revenue from mobile smartphone and tablet applications will significantly increase by 2017, estimating the field will generate over $35 billion in five years, up from less than $1 billion in 2009. The company cites more targeted advertising, growing consumer interest in virtual goods, and the adoption of subscription-based business models as top reasons for the growth.

As companies invest more in in-app promotion, advertising will peak in revenue growth by 2013, with improved targeting helping maintain CPMs.

“The battle for developers is on and supporting recurring revenue streams is essential to gaining developer support,” said Josh Martin, director of apps research at Strategy Analytics. “It is for this reason that Microsoft and Research in Motion are ensuring their new platforms support in-app purchase and subscription in addition to paid downloads and advertising at launch. They continue to battle for third place as the forecast shows Apple’s and Google’s app stores dominating revenue generation for developers throughout the forecast period.”

Yet, a stronger reliance on advertising to drive revenue won’t be the only change the mobile application market will see in coming years, as paid downloads will account for far less of the total revenue in five years than it does currently. Strategy Analytics states that paid downloads represented almost 70% of revenue in 2009, though that number will peak by 2014, only to dwindle to less than 36% of total revenue by 2017. With the company predicting more than 350 billion smartphone and tablet app downloads by 2018, only time will tell which programs will hold a strong presence among consumers and which will be just a flash in the pan.

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