This post is a contribution from David Hamann.
What distinguishes an entrepreneur from a financial analyst is that the entrepreneur tends to look outside the box, while the financial analyst looks inside the box (or sheets for that matter).
However, that’s really just the stereotype. An entrepreneur isn’t bound to look only outside the box. In fact, if anything, the entrepreneur of today is bound to look both inside as well as outside the box.
Simply put, the modern, versatile, and evolving entrepreneurs must find value wherever it can be found. To imagine a product that would become a sensation in the near future, it’s important for the product to be not just one pure, original idea that reflects brilliant problem-solving approach; the product must also be backed by stats about its success.Keeping that in mind, if you’re thinking about doing anything with the app market, you need to consider the stats.
Total Time Spent on Apps
In 2015, people spent roughly 63% more time on their phones (mainly Android smart phones) than the amount of time of they spent on their phones in 2014. Why did that happen? How is that important?
Why are people spending more time on apps?
Well, mainly because of better apps. The developers and publishers have been working like enthusiasts to create better apps. The apps keep getting simpler, faster, and more productive.
The constant and ruthless competition between app developers has created an evolution cycle with one law—the survival of the best. App companies have identified the elements that make an app really popular, most important of which is the app interface.
They’ve hired brain scientists, who tell them how addictive their apps are going to be, and how likely it would be for a user to develop a liking for the app.Frankly, that’s what really exemplifies resourceful analysis.
Why is the amount of time spent on apps important?
Now, how is the fact that people are spending a lot more time on apps important? It’s important because of 2 reasons. The first is that this statistic establishes that mobile is the platform of this age. It’s the place where people are going to spend time, work, shop, and enjoy.
It tells you that setting up something in the app department isn’t just fun or creative anymore; it’s necessary. It’s an investment you have to make.
Secondly, it shows that since people spend more time on apps, you can take it as an opportunity to get them to buy something non-essential. For example, if you were to ask people to download an app for entertainment, say 9 years ago, there’s a good chance you wouldn’t have gotten a very encouraging response.But that’s not how it’s going to be now.
Because people are already spending so much of their time on smart phones, it’s rather likely that they’ll give a chance to something non-essential on their phones. And that’s what you need.You need them to consider your program. Luckily, they will, now.
Annual Downloads Forecast
By 2020, the number of mobile app store downloads all over the world will reach about 284 billion. Right now, it’s 111.2 billion, and compared with now, it’s an increase of about 155% –or one and a half times. That’s phenomenal growth.
The projected reason for this is the emerging smart phone market. There are two sides to this: more consumers, and more developers.
A Look at Consumers
So here’s the thing: one reason that the number of apps people download in 2020 will be more than double the number of apps they downloaded in 2015 is an increased number of consumers. Those who didn’t own smart phones before (which were practically non-existent in developed countries up till very recently) are buying smart phones now because of lower smart phone prices and the realization that they’re not just fun products.
There are two reasons that developing countries are far behind the developed countries in the use of smart phones. First off, they don’t get the latest products because tech companies know that the average buyer of these countries doesn’t really have the means to buy their devices.
That brings us to the second reason: when companies don’t send the latest versions of their products in the markets and when there isn’t any competition, the prices of the small catalogue of products go up. That’s the loop they’re stuck in.
But in the past few years, we’ve seen economies like Russia and Brazil see massive increases in use of technology.
A Look at Developers
The second side of this is equally(or even more important) for entrepreneurs. The other reason why so many apps will be downloaded is that there will be a lot more developers. People who’ll develop apps, and market them, therefore, attract more customers to the shop.
That’s good and bad. That’s good because a higher number of developers means more amateur, rookie developers (i.e. easy competition). That’s bad because they’re still competition, and marketing areas like SEO, App Store Search Optimization, etc. will require a lot more effort.
Non-Game Apps Revenue in 2020
According to studies, the revenue for non-game apps in 2020 will be more than four times than the revenue for these apps in 2015, after an annual increase of 23% from 2015. This is where we need to discuss something other than consumers and developers; advertising and commerce.
It’s important to note that although in theory, advertising, the number of consumers, and the total revenue are all closely linked, advertising should be considered independently just for the sake of understanding the surplus potential for entrepreneurs.
For example, consumer behavior studies suggest that because users are spending increased amounts of time on Social Networking Sites, they’re more reachable and responsive through (personalized) advertisements than before.
What this simply means for entrepreneurs is that the revenue for the app industry is going to be a lot more than what it is right now (which is still a lot), and a big reason is that advertisement is going to be more effective because of better reach.
Annual Gross Revenue in 2016 and 2020
If you’re not yet convinced that the future of the app industry looks pretty spectacular, know this: the annual gross revenue for the global app stores is projected to be $51 billion, 24% more than what it was in 2015.
And there’s more, in 2020, it’s going to be $101.1 Billion. In fact, studies project that it’s going to be nearly as much as $200 billion in 2020 largely because of better marketing reach. Other than better marketing, two factors will contribute to this growth: increasing number of consumers in developing countries, and a more spending-driven approach with consumers in developed countries.
Increasing Number of Consumers in Developing Countries
Countries like India, China, Brazil, Russia and other huge economies will provide huge consumer bases for mobile apps. Increased and enhanced internet access through WiFi drones and 3G and 4G networking will connect users better in real time applications. These new users won’t spend much individually in these apps, but collectively (because of their huge numbers) they’ll contribute a lot to the total revenue.
Driving Spending in Developed Countries
As far as users in developed countries are concerned, by 2020, they will have established a lot more trust for internet (mobile) applications than they have now. Add to that, customized advertisements will serve as a powerful marketing tool.
The evidence of this lies in the effectiveness of Google Adwords and Facebook Advertisements. Both the platforms collect data about the user’s preferences and display ads accordingly. This not only increases the probability of landing new customers, but it also saves the marketer’s money from being used on people who’re not potential customers. And this is what’s being integrated into the app world.
In 2020, Google Play will be the app store with the highest number of users. In fact, the number of downloads on it in 2020 will be three times that of 2015, around 166 billion. Third-party Android, which is the most popular OS in local, low-budget smart phones, will see a growth of 158% in their app stores. The primary market of third-party Android will be developing cities of China.
The iOS, like always, will continue to cater to the developed countries and consumers with a lot of purchasing power. iOS downloads will grow by 46%, which would mean an annual 35.2 billion downloads in 2020.
With Google Play on top, third-party Android stores on second and iOS on third, all other Operating Systems take the fourth position.
Why should app stores concern an entrepreneur?
Well, to begin with, it tells you where the crowd is going to be. And frankly, when it comes to OS, you don’t really have the option of being a leader instead of a follower, unless you’re designing the OS instead of an app.
So it’s best to go with the flow, and develop for Android instead of Windows. That way, you’ll have a shot at penetrating the huge client bases, like China, Mexico and Indonesia.
But if you’re aiming for audience in Western countries like USA or France, you might go with iOS or you might have to choose between iOS and Android, based on your preferences (mainly demographic), or you may simply use a platform like BiznessApps that suits all operating systems.
Download this infographic.