It’s hard to imagine a mobile phone user who has not downloaded free or paid mobile applications, or apps, from an online store. The numbers are only set to increase.
Research firm Gartner Inc. predicts that by the end of 2014, over 185 billion apps would have been downloaded from mobile app stores, since the launch of the first in July 2008.
It’s a lucrative business for app stores. In 2010, their revenue is estimated to have reached $5.2 billion, both from end users buying applications and applications generating advertising revenue for their developers. The growth between 2010 and 2014 is forecast to be over 1,000%.
Apple Inc.’s App Store has immediate brand recall although there are smaller stores like Google Inc.’s Android Market, Nokia Oyj’s Ovi Store, Research In Motion Inc.’s App World, Microsoft Marketplace and Samsung Apps. The Apple App Store’s success rides on the popularity of the iPad and the iPhone.
The popularity of India’s own Mobango—one of the world’s largest independent mobile app stores with over 100,000 applications, including games and user-generated content—has been increasing. Mobango, a unit of Mauj Mobile, is a free app store.
“The user pays nothing for downloading of apps onto their mobile phones or computers,” said Badri Sanjeevi, chief operating officer at Mauj Mobile.
“Customers from approximately 150 countries use Mobango on a daily basis.”
Set up in 2003, Mauj Mobile has two main businesses—the content distribution and application store Mobango which it acquired in August 2010 after which the UK-based app store became a subsidiary of People Infocom Pvt. Ltd, a mobile media company, the parent company of Mauj Mobile.
The strategic investors include Intel Capital and WestBridge. Most of Mobango’s users are from the US, the UK, India and some other Asian countries. The revenue model is primarily built around global mobile marketing and helping developers monetize their applications.
Sanjeevi says Mobango is good for developers who are the key to the app economy but do not get a fair deal from large app stores—a view corroborated by a new survey by marketing firm App Promo.
It revealed that 80 % of developers are not generating enough revenue with their apps to support a stand-alone business. Around 60% aren’t even earning enough to recover development costs, the survey said.
Sanjeevi claims Mobango’s model favours developers who “engage with Mobango to deliver downloads of apps that are either on a trial basis or on ad-funded basis given that Mobango is mostly a free app store”.
He says the store has over 40,000 registered developers. “For a new developer, making the apps visible and reaching a relevant audience on these large stores is very difficult,” says Sanjeevi, adding that Mobango is able to manage the publishing of the application depending on the country that the developer has chosen, or the device.
Pushkar Chitale, DGM product& developer relations, Mobango.com.
For example, if a developer wants an application to be made available to customers only in India and only for Android devices, Mobango restricts the distribution availability of the application to the target segments.
Application stores’ revenue is split between the store owners and the developer. The average revenue share is based on a 70/30 split, with 70% going to the developer. By the end of 2014, advertising will be generating a little under a third of the revenue generated by application stores, up from 16% in 2010, according to Gartner.
Mobango provides a bidding system for developers for the price per download that they wish to pay. Based on competitive bids that the other developers place with Mobango, the application is featured on the site and that drives very large downloads.
“It gives them (the developers) detailed analytics for downloads by date. It provides the download by country where the download was achieved.
Also it provides details of end device that has actually downloaded the device,” says Sanjeevi.
Free downloads appear to work, and were forecast to account for 81% of total mobile application store downloads in 2011, according to Gartner.
Pushkar Chitale says his firm’s app opens up a host of entertainment options and allows users to upload and download multimedia elements
This percentage has been decreasing since the first launches in 2008, but Gartner estimated but it will increase again from 2012 through 2014.
Users will begin paying for more applications as they perceive value in the concept of mobile applications, and they become more trustful of billing mechanisms.
It shows in Mobango’s revenue. The Mobango product was developed towards the end of financial year 2010, says Sanjeevi, adding that 2011 was the first year of operations, revenue was modest and the company invested in building scale and reach.
“In 2012, revenue is expected to be in the range of $3-4 million—which is really the first full year of operations. We expect this year to continue to invest in the business in terms of technology and marketing expenses,” he said.
The future seems bright for Mobango.
According to a report by consulting firm Research2guidance in April, owners of the iPad and other tablets, such as those running on Google’s Android, now make up 8.6% of consumers using mobile apps.
That’s likely to expand as the number of tablet users is forecast to grow more than 150% by 2013, Research2guidance said.
Developers are already churning out more games and productivity tools designed with the tablets in mind.
In 2011, the number of apps in the Apple App Store for iPad rose 180%, the report said.
This March, Apple said its App Store had more than 550,000 apps for its mobile devices, with more than 170,000 native iPad apps available.
“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 sizeable 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.”
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