We used to call them programs. Designers called them applications. Now they’re 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 they’re 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 Microsoft’s 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 aren’t 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 Nokia’s 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: Who’s making the most money? Apple’s 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 Android’s 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. Apple’s 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 Google’s Android Market. With app makers jumping ship from RIM to Windows, though, it’s 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 Apple’s iPad are now finally turning towards Android platforms, with 56% of developers expressing interest in developing for Samsung’s Galaxy Tab devices and 49% looking to make apps for Amazon‘s (NASDAQ:AMZN) new Kindle Fire tablet.
Who’s 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 who’s 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 @ajohnagnello and become a fan of InvestorPlace on Facebook.
