Gartner: App revenue to grow 1000%

Worldwide mobile app downloads are forecast to reach 17.7 billion downloads in 2011, a 117% increase from an estimated 8.2 billion downloads in 2010, says research firm Gartner.

But by the end of 2014, Gartner reckons over 185 billion applications will have been downloaded.

Application store revenue is being tipped to surpass $15.1 billion in 2011, both from end users buying them and the apps generating advertising revenue for their developers.

"Many are wondering if the app frenzy we have been witnessing is just a fashion, and, like many others, it shall pass. We do not think so," said Stephanie Baghdassarian, Research Director at Gartner.

"We strongly believe there is a sizable opportunity for application stores in the future. However, applications will have to grow up and deliver a superior experience to the one that a Web-based app will be able to deliver. Native apps will survive the Web enhancements only when they will provide a more-personal and richer experience to the ‘vanilla’ experience that a web-based app will deliver."

Gartner says that alternative offerings to the Apple App Store gained traction last year.

“Android Market, Nokia's Ovi Store, Research In Motion's (RIM's) App World, Microsoft Marketplace and Samsung Apps are the key competitors that saw the number of application downloads grow in 2010,” the firm said.

The number of free app downloads has been decreasing since the first launches in 2008, and Gartner estimates free downloads will continue to decrease in 2011, but it will increase again from 2012 through 2014.

“Users will begin paying for more applications as they perceive values in the concept of mobile applications, and they become more trustful of billing mechanisms,” it said.

Gartner says the average revenue share is based on a 70/30 split, with 70% going to the developer. By 2015, advertising is expected to generate a little under a third of the revenue generated by application stores.

Google recently said that the world of mobile would have its full attention in 2011.