Mobile apps fail to generate massive profits

Users of mobile devices will download some $6.2 billion (£3.8bn) worth of applications from online stores this year, nearly double what was spent in 2009, acording to projections by Gartner.

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Users of mobile devices will download some $6.2 billion worth of applications from online stores this year, nearly double what was spent in 2009, acording to projections by Gartner.

However, Gartner noted, it remains unclear whether those sales results are bringing profits to the developers of mobile applications.

About 80% of mobile apps can be downloaded from online stores free of charge. Gartner is projecting its revenue totals for the remaining 20% of products. Some developers include advertising within free applications, which Gartner projects will generate an additional $600 million for mobile app developers.

Moble app developers are also boosting sales by offering users of free apps the opportunity to buy enhancements, upgrades or even physical goods for a fee, Gartner said.

For example, said Gartner analyst Carolina Milanesi, users of Touchnote's free Touchnote Postcard iPhone app can use the service to send postcards graced with personal photos for $1.49, which includes postage.

Gartner said it isn't clear whether increasing numbers of enterprise personal productivity mobile applications from large software makers are leading to increased profits at those companies. Gartner didn't analyse the profitability of mobile app sales, but plans to. In fact, most IT analyst firms are only beginning to probe into the profitability of mobile apps sales, and into what business models could be most successful financially.

"All I can say is that this is not certainly an easy business," Milanesi said.

Gartner's forecast for mobile app spending through app stores supports his optimism. Mobile app store downloads in 2010 expected are to reach 4.5 million, valued at $6.2 billion. That number will soar to 21.6 million downloads in 2013, valued at $29.4 billion, Gartner added.

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