Building an app? Relax, there’s only a 99.9% chance it won’t make a profit

Mobile icons iPhone

Mobile icons iPhone

We’d like you think about something for a moment. When was the last time you picked up your phone and scrolled through the app store in search of a hidden gem? Chances are, you haven’t done it in quite a while. And why would you? Both Apple’s Appstore and the Google Play Store have over a million apps (even Windows Phone has over 200 000 apps), so discovering great apps the old-fashioned way would mean suffering through a whole load of duds.

It’s obviously a lot easier to let your social connections, recommendation engines and the tech press do the legwork for you. Thing is, the less we rely on self-discovery, the less likely the average app developer is to make a profit. Well, that’s what research house Gartner reckons at any rate.

It may seem hard to believe when sales on the Appstore exceeded US$10-billion in 2013, the research house predicts that by 2018 less than 0.01% of consumer mobile apps will be considered a financial success by their developers. Now Gartner’s been wrong before, but the logic on this seems fairly sound.

“The vast number of mobile apps may imply that mobile is a new revenue stream that will bring riches to many,” says Ken Dulaney, vice president and distinguished analyst at Gartner. “However, our analysis shows that most mobile applications are not generating profits and that many mobile apps are not designed to generate revenue, but rather are used to build brand recognition and product awareness or are just for fun. Application designers who do not recognise this may find profits elusive.”

That’s all well and good but it doesn’t answer a crucial question: apart from battling to stand out from the crowd though, why is it so difficult to make money from apps if that’s what you’re after?

Well, one reason is that it’s becoming increasingly easy to build functional apps, thanks to a slew of tutorials, building programs and a steadier mobile landscape.

According to Dulaney, this has helped create a “hyperactive” app market “with more than 200 vendors developing mobile application development platforms and millions of developers using these products and open-source tools to build mobile applications”.

Perhaps more significantly though, the bounty of good, free mobile apps has set high expectations for what should be paid for. “There are so many applications that are free and that will never directly generate revenue. Gartner is forecasting that, by 2017, 94.5% of downloads will be for free apps,” says Dulaney.

“Furthermore, of paid applications, about 90% are downloaded less than 500 times per day and make less than US$1 250 a day. This is only going to get worse in the future when there will be even greater competition, especially in successful markets.”

While Gartner doesn’t offer obvious solutions (hint: there aren’t any) to avoiding this fate with your “killer app”, there are a few things you should bear in mind when setting it loose in your app store of choice. These include sweating details you might not necessarily think of, such as putting time into the description and the right keywords.

As the app stores get bigger though, the amount of luck needed to make it big will only increase. As it is, for every WeChat and Diamond Dash, there are thousands upon thousands of barely downloaded apps. That situation’s hardly likely to improve with time.

One thing that will change however is the number of ways developers can put themselves out there on mobile.

The mobile browser is evolving from a thin rendering engine to a sophisticated application delivery platform running complex JavaScript applications. According to Gartner, by 2017 HTML5 will finally be “the best option for a widely available, platform-neutral application delivery technology that is able to deliver sophisticated applications with a good-quality user experience”.

That said, it also reckons that issues such as performance, fragmentation and immaturity will challenge developers for several years. The research house also warns that they should be wary of vendors trying to lock them in to platform-specific browser features.

The overall app space should meanwhile start to open up again, with Gartner predicting that Windows, in its various guises, will be an increasingly viable platform.

“At least three platforms (Android, iOS and Windows) will gain significant market share in the smartphone, tablet and PC space, requiring many organisations to support multiple platforms for both consumer- and employee-facing applications,” says Dulaney. “Although more than 100 ‘platform independent’ development tools exist, most involve technical or commercial compromises, such as lock-in to relatively niche technologies and small vendors. This will drive increasing interest in HTML5 as a somewhat-standardised, widely available, platform-neutral delivery technology”.



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