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Origins of Mobile App Economy

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Origins of Mobile App Economy

Origins of the ‘Indian app economy’ can be traced down back to the launch of the iPhone in    year 2007 followed by the App Store in year 2008. Since then, the international market for apps has been rapidly growing at unprecedented rates. Analysts estimate app downloads have increased from $ 31.2 billion in 2012 to $ 106.5 billion in 2014. This number is expected to rise up to $ 415 billion by 2018.

The App Store was one of the first commercially successful and widely accepted digital distribution platforms since it challenged the monopoly of the ‘walled garden’ through which mobile operators are able to control content. Mobile operators forced consumers to interface with their network for access to apps and other value added services that were delivered via an operator’s network. Therefore, operators were considered as the gatekeepers, and content providers paid disproportionate amounts to operators to feature their applications.

But Competition triggered by technological innovations and advancements such as the development of Wi-FI enabled smartphones and the emergence of exclusive online stores allowed bypass of an operators’ network. This had weakened their grip on the app ecosystem. These developments encouraged the shift from a telecom-operator controlled network to Wi-Fi as a source of content delivery. This marked the inflexion point for the app revolution!!

 On its part, Apple permitted any software/app developer from the public domain to design apps for the App Store and offered a flat 70 percent of the total revenue to developers. On contrary, telecom operators had adopted a 30:70 revenue share model in their favour. In year 2011, Vodafone offered higher revenue shares to developers to popularise apps. Content thus became more easily and compfortably discoverable and the App Store represented a one-stop-shop which interfaced between many developers and consumers.

This model of having one platform to disseminate and facilitate the payment of apps has been so successful that Apple’s competitors which include Google, Nokia, Research in Motion and Microsoft launched their own app stores. Other aggregators such as Vserv provide app developers with fresh avenues for monetization.

Apple encouraged advance a paradigm in which mobile devices evolved from being simply tools for text and voice communication to pocket personal multi-media gadget. As consumers wished to do more with their mobile devices, the ample supply of apps kept pace with the increasing and diverse demand. There are apps now that help users learn new languages, read music, navigate cities, share files, read the news, learn food recipes, and record important health-related and beauty tips information among many other things. The proliferation of apps across many verticals and functions underlines why this sector is regarded as an ‘economy’ in itself. It is also indicative of the high degree of competition that exists amongst developers. It also demonstrates the shift in value from handsets to apps, as users place more value on mobile software than hardware now.

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