Direct Revenue from Mobile ‘App Stores’ Expected to Cross $14B in 2012

According to a recent study, the revenue generated from Apple’s mobile AppStore and other similar options like Android Market will increase to $14.1 billion in 2012, further increasing to $40 billion by 215.

Canalys on Wednesday stated that the sales from digital downloads for mobile device will increase by 92% from and expected $7.3 billion in 2011. The firm also expects that providing too many applications can also cause some problems for users as it may confuse them. They also suggested mobile network operators to create their own app stores to compete with the existing ones by providing a better customer environment.

“The leading stores already have hundreds of thousands of apps, so it’s hard for operators to compete with those numbers,” Canalys Analyst Tim Shepherd said. “On the other hand, too much choice brings serious problems in terms of application discovery for both developers and users, which operators can turn to their advantage.”

Canalys justifies this with an example. If a person is looking for a weather app in Android Market, he/she will find a number of applications with no ratings and reviews, thus resulting into a problem for the user.

“As more content and services are delivered over their networks, many MNOs are aspiring to move up the value chain,” Shepherd said. “When it comes to detailed subscriber data, operators certainly have the competitive advantage.

“While they must clearly be careful to respect their customers’ privacy, the data they hold leaves them well positioned to propose targeted marketing services, such as promotions and recommendations, as well as richer editorial guidance, better localization, improved security and simpler billing processes.”

By creating their own apps, Mobile Network Operators can increase the customers loyalty by giving them what they prefer. They can also attract new customers.

“Some operators are concerned that having their own branded app stores will appear as a throwback to the ‘walled gardens’ of the past,” Shepherd said. “While consumers would probably object to operators installing their app stores in place of vendor ones, there is no reason for operators not to pre-install their app stores alongside vendor stores to compete on user experience.”

Android Market is growing fast but Apple’s AppStore is the largest mobile app store with over 425,000 applications.  It is worth noting that there have been 14 billion downloads from Apple’s AppStore since 2008 when it launched. Apple has paid $2.5  to its developers so far.

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