Gartner announced some numbers on Monday that sound like good news for consumers but bad news for app developers. According to predictions by the research firm, less than 0.01 percent of mobile apps will be considered financially successful by their developers in the next four to five years.
Part of the problem is the plethora of apps on the market, according to Gartner. Not only are there several platforms that sell apps, but the big hitters -- like Apple's App Store and Google Play -- have. Rather than sorting through these apps, consumers are increasingly relying on recommendation engines, friends, social networking, and ads to discover new apps.
"The vast number of mobile apps may imply that mobile is a new revenue stream that will bring riches to many," Gartner analyst Ken Dulaney said in a statement. "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 recognize this may find profits elusive."Competition in the app world is also fierce. According to a study done last year by research firm Canalys, of the more than 1 million apps in Apple's App Store only in their first year.
Another issue for developers is there are tons of free apps; so, this means that consumers are wary of paying for something when they can find nearly the equivalent for no cost. Gartner estimates that by 2017, 94.5 percent of app downloads will be for free apps.
"There are so many applications that are free and that will never directly generate revenue," Dulaney said. "Furthermore, of paid applications, about 90 percent are downloaded less than 500 times per day and make less than $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."