Mobile apps a gold rush for providers

Applications for smartphones have become coin of the realm for providers like Apple. But, says In-Stat, that isn't so much the case for developers.

The mobile apps market has become a cash cow for carriers such as Apple but is turning increasingly competitive for developers trying to make a profit, according to a new In-Stat report.

Mobile subscribers are downloading apps in ever increasing numbers as they learn more about the capabilities of their smartphones, said the report, released Wednesday. As the company that set the standard for mobile apps, Apple and its App Store are seeing the most action, with iPhone and iPod Touch users downloading 2.4 times more apps than the other smartphone owners.

But although the news may be bright for Apple and other providers, many application developers are facing a tougher time. Tighter competition is forcing lower prices for some apps, which means that developers may struggle to turn a profit, said In-Stat.

Average downloads per user
Average downloads per user In-Stat

Not surprisingly, free apps are often the hottest type of download. Among specific categories, free mapping and direction tools, free games, free news, and free social networking tools are the most popular. Beyond app downloads, however, In-Stat also tracked actual app usage, as people will often download a program, especially a free one, and then delete it if it doesn't hold their interest.

Social networking and smartphone utilities proved to have the most staying power, with above-average usage and below-average deletion rates. Games are always popular but frequently deleted unless they can build up a loyal following.

Price points also play a huge factor in the success or failure of an app. In-Stat found that $2, $5, and $10 seem to be psychological barriers, leading to limited demand between these price levels. To better compete in a tight market, In-Stat advises app developers to price their programs at specific levels of $9.99, $4.99, and $1.99.

To compile its report, In-Stat surveyed more than 500 users last October and conducted interviews with smartphone manufacturers and mobile app store vendors. The company also relied on industry publications and other sources for its data.

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