THE MOBILE APPLICATION MARKET

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1 THE MOBILE APPLICATION MARKET INDEX Index Table of Contents Table of Contents... i List of Figures... vi Executive summary Introduction to mobile applications Background App stores simplify distribution for developers Explosion in the number of apps and app stores Mobile Internet and the rise of the mobile app market Mobile application platforms Mobile application categories Gaming Entertainment Books Communication Utility and productivity Mobile enterprise Other categories App usage App discovery Third party app directories App store network effects The mobile application ecosystem Mobile handset market overview The smartphone market Focus shift from devices to mobile app ecosystems Touch input and advanced sensor technologies drives app innovation Apps and improved hardware enables smartphones to challenge PCs Mobile application platforms...28 STRATEGIC VAS RESEARCH SERIES i

2 INDEX THE MOBILE APPLICATION MARKET Android BlackBerry OS ios Symbian WebOS Windows Phone Brew MP Samsung s Bada platform Java for Mobile Devices Mobile network operators and the app market App markets reduce operators to broadband providers Operators launch their own app stores to reclaim control The Wholesale Application Community Operator opportunities in the mobile app market Mobile app developers and publishers Gaming is the most popular app category for developers ios and Android are the most popular platforms for developers In-app ad solution providers and ad networks Digital ad networks and in-app ad solutions Apple iad RIM BlackBerry Advertising Service Microsoft Windows Phone 7/Microsoft Advertising Nokia Ovi Store in-app advertising add-on Google Admob Mobile application stores OS developer application stores Android Market Windows Phone Marketplace Device vendor application stores Apple App Store BlackBerry App World HP App Catalog...55 ii STRATEGIC RESEARCH SERIES VAS RESEARCH SERIES

3 THE MOBILE APPLICATION MARKET INDEX Nokia Ovi Store Samsung Apps LG World Operator application stores AT&T AppCenter Bharti Airtel App Central China Mobile Mmarket Orange App Shop Verizon V CAST Apps Vodafone 360 Shop Third party application stores GetJar Amazon Appstore for Android Appitalism White label application stores Appia Huawei s WAC enabled Digital Shopping Mall Solution Ericsson estore Mobile app store economics Application store revenues Revenue share models Mobile app marketing App store billing solutions Mobile app pricing Mobile application monetisation strategies and business models Paid apps Freemium one free limited version combined with one premium version In-app payments Subscriptions Ad-funded Marketing and brand apps New channel to market...80 STRATEGIC VAS RESEARCH SERIES iii

4 INDEX THE MOBILE APPLICATION MARKET Bundle component Attract a large user base and building communities Free apps Mobile app business model trends Choosing monetisation strategy Cross platform development and multi monetisation strategies reduce risks Market forecasts and conclusions Market forecasts by mobile platform Application download forecast by mobile operating system Direct revenues forecast by mobile operating system In-app advertising revenues forecast by mobile operating system Market forecasts by region Application download forecast by region Direct revenues forecast by region In-app advertising revenues forecast by region Conclusions and strategic advice App stores is about successful ecosystems E-commerce, content and subscriptions opportunities with impediments Business models and monetisation Mobile platforms and cross platform development The mobile web, HTML5 web apps and native apps Industry players Device vendors Apple Nokia Research In Motion Samsung Electronics Mobile operating system vendors Google Microsoft Mobile operators AT&T iv STRATEGIC RESEARCH SERIES VAS RESEARCH SERIES

5 THE MOBILE APPLICATION MARKET INDEX Verizon Wireless Vodafone China Mobile Developers and publishers Electronic Arts - EA Mobile and Chillingo Gameloft Rovio Third party in-app advertising solution providers Smaato Amobee Tapjoy Glossary STRATEGIC VAS RESEARCH SERIES v

6 INDEX THE MOBILE APPLICATION MARKET Index List of Figures Figure 1.1: Share of downloads by app category (May 2011)...8 Figure 1.2: Application usage by category...13 Figure 1.3: Top app discovery methods...14 Figure 1.4: Examples of app directories, search and discovery services (June 2011)...15 Figure 1.5: Network effects between users and developers...16 Figure 2.1: The mobile application ecosystem...19 Figure 2.2: Mobile subscriptions and handset sales by region (2010)...20 Figure 2.3: Smartphone and featurephone shipments (World )...21 Figure 2.4: Unit shipments and market share by vendor and OS (World Q2-2011)...23 Figure 2.5: Active smartphone user base by OS (World )...24 Figure 2.6: Smartphone shipments by primary input mechanism (World )...26 Figure 2.7: Overview of key smartphone operating systems (Q2-2011)...28 Figure 2.8: Mobile application developer origin...38 Figure 2.9: Examples of mobile application developers (May 2011)...39 Figure 2.10: Number of available apps by mobile app stores (January 2010 July 2011)...42 Figure 2.11: Examples of mobile ad networks...45 Figure 3.1: Leading mobile app stores (July 2011)...50 Figure 3.2: Leading app stores by number of downloads per day (May June 2011)...51 Figure 3.3: Examples of operator application stores (July 2011)...58 Figure 3.4: White label mobile app store providers...63 Figure 4.1: Direct revenues by mobile operating system (World 2010)...67 Figure 4.2: Mobile app revenue streams...68 Figure 4.3: Billing solution characteristics...70 Figure 4.4: Payment methods supported by mobile application stores...71 Figure 4.5: Mobile app price development...72 Figure 4.6: Mobile application monetisation strategies...73 Figure 4.7: Free versus paid apps available for ios and Android devices (May 2011)...74 Figure 4.8: Ad-funded app category ranking...77 vi STRATEGIC RESEARCH SERIES VAS RESEARCH SERIES

7 THE MOBILE APPLICATION MARKET INDEX Figure 4.9: Top 3 app business models ranked by generated revenues (May 2011)...81 Figure 4.10: Free versus paid business models for different application types...83 Figure 5.1: Mobile application downloads and revenues (World )...85 Figure 5.2: Handset shipments by segment and price range (World )...86 Figure 5.3: Application downloads by mobile operating system (World )...87 Figure 5.4: Direct revenues by mobile operating system (World )...89 Figure 5.5: In-app ad revenues by mobile operating system (World )...91 Figure 5.6: Mobile application downloads by region ( )...92 Figure 5.7: Direct revenues by region ( )...93 Figure 5.8: In-app ad revenues by region ( )...93 STRATEGIC VAS RESEARCH SERIES vii

8 INDEX THE MOBILE APPLICATION MARKET viii STRATEGIC RESEARCH SERIES VAS RESEARCH SERIES

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