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The App Ecosystem Weekly for 11/9/12: A Carrier App Store Disappears As Adoption Rises

It’s November 9th, 2012, and welcome to this week’s issue of The App Ecosystem Weekly. This week, we’re reviewing news about the size of the app market over the next few years, overall distribution of smartphones, and watching phone carriers give up on running their own app stores. If you’re new to Kinvey’s App Ecosystem Weekly, you can follow us on Twitter here or subscribe via RSS here. We publish weekly roundups of the most interesting and thought provoking stories around the app ecosystem, app development, and the rest of the mobile world.

Gartner Forecasts 50% Growth In Smart Device Sales Next Year
Research and analysis firm Gartner released a report this week, forecasting a rise in the sales of smart devices from 821 million in 2012 to 1.2 billion in 2013. This increase will be primarily fueled by sales of Android devices worldwide, as the cost to manufacture the devices drops and prices drop dramatically. Tablet sales are also forecasted to rise dramatically, but will remain a small piece of the overall sales number’s increase.

A separate report from IDC showed that worldwide tablet shipments (not sales) reached 27.8 million units in just the third quarter of 2012, a time period that does not include the launch of the iPad Mini or iPad 4. As a result, most of that increase was in sales of tablets by Amazon and Samsung, but Apple will rise back up this quarter on the back of their new tablets. An early Apple sales figure indicated that they sold 3 million iPad Minis on the launch weekend alone and that supplies were low as the tablet was sold out nearly everywhere, a strong number that shows Apple will have a very strong Q4 performance in the tablet market.

Verizon Folds Up Tent On Carrier App Store, Encourages Users To Use Google Play
Did you know that Verizon launched their own Android & BlackBerry App Stores in the spring of 2010? Neither did most of their customers, who decided not use the stores either. Early in the growth of the app ecosystem, Verizon decided that they wanted to try and win a chunk of the business themselves. However, it never saw much developer adoption, and without apps to fill it, people chose to use other systems to get apps onto their devices, like Google Market / Google Play. As a result, Verizon will begin winding down their app store starting next month and completely closing it at the end of next March.

The biggest lessons in here is something that Verizon has definitely learned since 2010, but was unable to implement – People will only shop in an app store if there are great apps there. Developers will create great apps but want to make sure that the largest possible audience will see them. Deploying them in a carrier-specific app store is no way to reach a large audience, even if it’s the largest carrier in the United States. Verizon may have realized that they had an app quantity problem, but if they did it was too late to shift the momentum away from Google Play and back to them. At the same time, RIM went from struggling in 2010 to completely failing in 2012, and no apps rescue operation was going to get that app ecosystem started again this year. Not even the explosion of Android over the last three years could save the Verizon App Store, though.

With Growth In Device Sales, Comes Growth In App Sales
In 2009, the first real year of apps being sold on smart devices, developers sold $1 billion dollars worth of apps, primarily just on the Apple App Store. This week, Strategy Analytics predicted that the total revenue number will reach $35 billion by 2017, but still almost entirely from the Apple and Android ecosystems. A large part of that equation is about what ecosystems have proven market adoption of apps and heavy app usage, as revenue from paid downloads is expected to drop significantly but revenue from app-based advertising will rise, where 2013 is expected to be the first year that apps across all industries generate more revenue from ads than paid downloads or in-app features.

Look for significant innovation and feature development around placement and targeting of mobile ads in apps, as developers look for new ways to monetize their work and advertisers work on new targeting mechanisms.

That’s this week’s App Ecosystem Update, covering mobile technologies, app development, and trends & events in the space. Please follow us on Twitter, subscribe via RSS, and stay tuned for future updates from the Kinvey team!

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