Who’s Making Money on the Ever-Growing App Market?

We used to call them programs. Designers called them applications. Now theyre
apps, and they are everywhere. The modern American consumer is bombarded from
all angles with apps, from old media standbys like newspapers hocking smartphone
editions, to modern gadgets like the iPad whose greatest business success is
driving app sales themselves. The mobile app market is growing fast enough to
reflect that cultural saturation. Research firm Canalys expects the mobile app
market to generate $7.3 billion by the end of 2011 . The market will nearly
double by the end of 2012, growing to $14.1 billion. By 2015, mobile apps will
be a $36.7 billion business. But just who is making that money? Right now, the
answer is complicated where consumers are buying their apps, how much theyre
spending, and where app developers are pooling their resources is changing
rapidly. According to a report at All Things Digital , Apple (NASDAQ: AAPL ) and
Google s (NASDAQ: GOOG ) platforms are the Nos. 1 and 2 choices for app
developers. Where Research in Motion s (NASDAQ: RIMM ) BlackBerry operating
system used to be a close third in terms of developer interest, Microsoft
(NASDAQ: MSFT ) Windows has overtaken it. Thanks to enthusiasm for Microsofts
partnership with Nokia (NYSE: NOK ), 38% of app developers are interested in
developing for Windows Phone 7 while just 21% are now interested in developing
for BlackBerry. App developer interest is just one piece of a much larger story,
though. Actual app users arent in lockstep with makers. Apple might lead app
maker interest, but iPhone users download fewer apps than consumers on competing
devices. As of September, the average user on Nokias Ovi downloaded 160% more
apps than the average iPhone user. The average Microsoft user downloaded 80%
more, and BlackBerry users 43% more. (The average Google Android user actually
downloaded 5% fewer apps than iPhone users.) Which brings us right back to the
$7.3 billion-dollar question: Whos making the most money? Apples app store
generated $1.8 billion in revenue last year, according to IHS Screen Digest. The
average iOS app maker, meanwhile, only receives about $8,500 from Apple per
year. Google Androids App Market pulled in $102 million total last year, and
those apps have generated just $2,500 per app for developers on average.
BlackBerry Apps generated about $165 million, and Ovi apps about $105 million.
2011 should end with a very different landscape, though. Apples recently filed
10-K reported $6.3 billion in sales from its iTunes segment, which includes all
App Store sales. RIM claimed in October that its BlackBerry App World still is
more profitable than Googles Android Market . With app makers jumping ship from
RIM to Windows, though, its difficult to say how long RIM will be able to keep
boasting about its profitability. This is all to say nothing of the growing
tablet market as well. App developers previously captivated by Apples iPad are
now finally turning towards Android platforms , with 56% of developers
expressing interest in developing for Samsungs Galaxy Tab devices and 49%
looking to make apps for Amazon s (NASDAQ: AMZN ) new Kindle Fire tablet. Whos
making the money? The simplest answer right now is the platform holders, Apple,
Google and the others but not the developers. But where those scantily paid
developers go, though, could alter whos eating the biggest slice of the
ever-growing app market pie. As of this writing, Anthony John Agnello did not
own a position in any of the stocks named here. Follow him on Twitter at