Close to 20% of U.S. smartphone owners spent $100 on apps in 2008

More than 17 percent of U.S. smartphone users who installed mobile applications in 2008 spent between $100 and $499 on premium apps according to a new consumer report conducted by ABI Research. The study, conducted in November 2008 among 235 U.S. smartphone owners, contends that the level of spending is particularly significant given the low price point of most applications: A chart published in late November by news site EdibleApple.com noted that among the 9,700 or so iPhone and iPod touch apps available in Apple's App Store at that time, about a third are priced at 99 cents. More than 2,000 App Store downloads are free, and close to 1,500 are priced at $1.99 each.

"Apple is seen by some as hurting the market with its iPhone App Store," said ABI Research senior analyst Jeff Orr in a prepared statement. "It drives the price of content down to $1-$2, using a model similar to its successful iTunes music store. If you exclude Apple from the mix, applications for other platforms cost about $7-$25 each." ABI adds that because many mobile software developers lack the financial resources to create applications for all available smartphone platforms, they must focus on only one, which translates to a "margin vs. volume" quandary demanding they sell many copies of their app through the App Store at a very low price or sell fewer via rival application storefronts while charging a higher premium and earning more per transaction.

ABI Research nevertheless adds that Apple has significantly reshaped the business of applications sales thanks to marketing efforts touting the promise of mobile content, creating a halo effect around the rest of the industry. ABI notes that other device manufacturers and content developers working on non-Apple platforms all saw a bump in sales and downloads due to increased consumer awareness of the smartphone category.

For more on the ABI study:
- read this release

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