App downloads don't always equal app usage

We know iPhone applications have drawing power: A month ago, Apple announced that users downloaded more than 1.5 billion apps in the App Store's first year, and new data released by mobile advertising network AdMob indicates that 62 percent of iPhone users install between one and six new applications each month--moreover, 22 percent download more than 11 new apps each month. What iPhone applications lack is staying power: AdMob notes that even after all those apps are downloaded, 40 percent of iPhone owners use between four and six apps each week and 17 percent use between one and three apps each week--by comparison, only about 5 percent use more than 20 apps per week. It's not the first research to suggest that iPhone owners download more apps than they actually use--in February, iPhone analytics firm Pinch Media reported that consumers stop using the average iPhone app almost immediately, with only 20 percent of users ever returning to an app the day after downloading it.

A new forecast issued this week by market research firm Frost & Sullivan anticipates that smartphone downloads from all app stores will reach 6.67 billion per year in 2014, crediting the overwhelming number of free applications as the key to adoption in the U.S. market. But how many of those 6.67 billion apps will consumers use on a consistent basis, especially when firms like Pinch Media state that free app usage drops off even more precipitously than premium app usage? Quality applications are the key to future mobile industry revenue growth according to research firm iSuppli, which anticipates that global revenues from wireless data services (excluding messaging) will increase from $87.7 billion in 2009 to $188 billion by 2013. The growth depends on a number of factors in addition to delivering appealing apps and content, however--according to iSuppli, carriers must also implement strategies and develop business models that focus on monetizing broadband access, offering services that capitalize on mobility and leveraging mature billing capabilities. "Failure to do so will result in contraction in data and total revenues, excessive subscriber churn and a slowdown in market development," warns iSuppli director and principal analyst Dr. Jagdish Rebello in a prepared statement.  

The iSuppli forecast cites Apple's controversial decision to reject Google Voice and related applications as an illustration of the data revenue battles to come as competitors vie for ownership of customers: "By introducing applications and services that allow customers to make calls and send text messages without paying the operators, wireless operators have no incentive to invest in network upgrades," Rebello says. "This is the reason why many carriers are pushing out the upgrades of their networks to 2010/2011, compared to 2009/2010 before. With billions of dollars in expected investments, the stakes are huge for the wireless carriers." But operators and app stores can't deny subscribers applications like Google Voice forever, especially when so few apps truly resonate with the smartphone user population. Free or cheap applications with limited utility and appeal still have their place, but if the mobile industry wants to keep consumers interested for the long haul, then the focus needs to shift to apps that keep them interested for more than a day. -Jason