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January 13, 2014

Mobile apps fail to generate profit

94.5% of downloads will be free by 2017.

By Amy-Jo Crowley

Less than 0.01% of mobile applications will be considered a financial success by their developers through to 2018, the latest research has suggested.

The study, conducted by analyst firm Gartner, said consumers increasingly spend more time trying to find new apps on the internet or through friends rather than sorting through the thousand of mobile apps already available.

Ken Dulaney, VP and analyst at Gartner, said: "The vast number of mobile apps may imply that mobile is a new revenue stream that will bring riches to many.

"However, our analysis shows that most mobile applications are not generating profits and that many mobile apps are not designed to generate revenue, but rather are used to build brand recognition and product awareness or are just for fun.

"Application designers who do not recognise this may find profits elusive."

According to the research, more than 200 vendors are developing platforms for mobile applications, while millions of developers use them to build their own applications.

By 2017, Gartner predicted that 94.5% of downloads will be free for apps.

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"Furthermore, of paid applications, about 90% are downloaded less than 500 times per day and make less than $1,250 a day. This is only going to get worse in the future when there will be even greater competition, especially in successful markets," said Dulaney

The research said browser on mobile endpoint devices will be used as a sophisticated application delivery platform, with 50% of new web apps involving complex client-side JavaScript.

The "platform-neutral" option of developing browser-based apps, using technologies such as HTML5, is still hindered by performance challenges, fragmentation and immaturity, according to Gartner.

The analyst also warns developers to be on the look out for vendors trying to lock them in to platform-specific browser features.

"Although more than 100 ‘platform independent’ development tools exist, most involve technical or commercial compromises, such as lock-in to relatively niche technologies and small vendors. This will drive increasing interest in HTML5 as a somewhat-standardised, widely available, platform-neutral delivery technology," added Dulaney.

The research also found that 20% of enterprise BYOD programmes as deployment of mobile device management (MDM) measures become too restrictive.

"Whether via formal BYOD programmes, or just via devices coming in the back door and being configured to access corporate systems, the use of consumer technologies in the work environment presents a threat to IT control of endpoint computing resources," said Mr Dulaney.

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