App store downloads forecast to reach 6.7B by 2014

Smartphone downloads from all app stores will reach 6.67 billion per year in 2014 according to a new forecast issued by market research firm Frost & Sullivan, which credits the overwhelming number of free applications as the key to adoption in the U.S. market. Despite the projected growth, Frost & Sullivan warns that app store providers face a series of challenges, chiefly ensuring service differentiation and optimal management--the report suggests providers should be open to new business models designed to drive the introduction of new services and content types, and also should offer a clear value proposition.

"Unless the app store providers establish exclusivity agreements with application developers--something that is not feasible for a large majority of applications--it will be difficult to provide enough differentiation through the app stores," said Frost & Sullivan analyst Vikrant Gandhi in a prepared statement. "The best example of how this could be done is Apple's App Store, in which the entire experience of service purchase and consumption--including device characteristics, form factor and the operating environment--was a radical shift at the time of its introduction."

Frost & Sullivan also cautions that a single participant cannot provide all necessary services, suggesting that app store providers work with multiple application providers and offer them sufficient incentives for their app store initiatives. The report adds that independent, third-party app store providers can also be used to run an app store business profitably with adequate service differentiation. "For instance, outsourcing or white-labeling of the app store business might become a good idea in the long run since a device vendor or an operating system provider may not want to commit large resources to manage the smartphone app store business," Gandhi said.

For more on the app store report:
- read this release

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