Hype over mobile app downloads to slow

Global downloads for mobile apps are expected to grow at a compound annual growth rate (CAGR) of 153 percent between 2008 and 2011, but will drop to 33 percent by the end of 2014, according to a new report Friday.

Released by research firm Ovum, the study added that overall downloads including free and paid-for apps, will climb 83 percent from 491 million in 2008 to 18.7 billion in 2014.

It noted that Apple's App Store, which recently reached the 2 billion-download mark, helped fuel market demand for applications between 2008 to 2009. In fact, Ovum estimated that Apple will account for some 70 percent of total app downloads in 2009, but this will dip to less than 20 percent by the end of 2014.

The research firm said the overall market growth will slow through to 2014, due largely to the emergence of substitutes for app downloads, including browser-based services,

Ovum noted that while the market presents "significant potential", there is also "a great deal of hype", where not all market players will succeed in taking a significant share.

The report noted consumers' willingness to pay as a key factor in determining the overall size of the market. "The industry is already seeing a great deal of pressure on application pricing," the research firm said.

Free downloads are expected to grow faster than paid applications at a CAGR of 88 percent between 2008 and 2014, compared to 68 percent for paid applications.

According to Ovum, the lack of operator billing will prove a barrier for paid-for applications in some markets, particularly emerging markets, where there generally is low penetration of credit cards and bank account holders.

Asia to see strongest growth
The Asia-Pacific market only accounted for 6 percent of total mobile app downloads in 2008, but will grow its show to 19 percent at the end of 2014. Ovum attributed the initial unequal distribution as a result of the low number and availability of locally relevant applications.

By 2010 or 2011, however, mobile apps will proliferate across all markets and supply-side issues will have less impact on demand growth.

Ovum noted that the Asia-Pacific region will see the strongest growth through to 2014, growing at a CAGR of 126 percent, compared to 94 percent in Western Europe and 62 percent in North America.