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According to a new report from Gartner, worldwide revenue from mobile applications will total $6.8 billion in 2010, an increase of 60% over the $4.2 billion spent in 2009. Growth in revenue from mobile apps can be expected to continue at a rapid rate, as more consumers purchase smartphones and more apps become available. Gartner predicts that in 2013, 21.6 billion apps will be downloaded, generating nearly $30 billion in revenue — more than a fourfold increase over 2010.
Gartner forecasts that 82% of all downloads will be free in 2010, and that the share of free apps will increase to 87% by 2013. This leaves mobile advertising to make up for the loss in share for paid apps — Gartner claims that in 2010, 0.9% ($0.6 billion) of mobile app revenue will be generated by advertising.
App makers will be more dependent on advertising revenue as the number of free apps proliferates. Just from 2009 to 2010, average revenue per app is expected to drop by 11% — from $1.68 to $1.50. By 2013, according to Gartner’s numbers, the average revenue per app will be $1.36.
My prediction is that the explosion in the number of smartphone users and available apps will result in a short head of high-revenue-generating apps and an extremely long tail of free to low-revenue-generating apps. Just like any nascent business, the marketplace for mobile will mature over the next three years, with increasing consolidations and company buyouts. Indeed, it’s already begun with Google’s purchase of AdMob and Apple’s purchase of Quattro Wireless.