Business Insider Underestimates Size of App Economy

The Business Insider just published an analysis where they downplay the size of the App Economy.

Despite how much attention it’s given, the mobile app economy isn’t as big as you might think. Based on an aggregation of data points from iSuppli, Forrester Research, company releases, and our own estimates, mobile app revenues were a little under $3.5 billion last year
.

The problem with this number is that it assumes that revenues collect through app store accurately represent the whole extent of the App Economy. Nothing could be further from the truth.  Consider, for example, all the free apps distributed by retailers, financial companies, media companies, governments, religious institutions,  and so forth.   These apps collect no direct revenue through the app stores, but they are  a crucial  way for companies to reach customers and potential customers.  For example, you can download the Goldman Sachs research app for iPad  for free–but you have to be a corporate or institutional client to log on. That income flow doesn’t show up as part of the Business Insider numbers.

Or take Netflix. I download the Netflix Android App for free, so no revenues shows up in the Business Insider numbers. But guess what? I still have to put in a password for my netflix account, which costs $7.99 per month.  Another flow of income omitted from the BI numbers.

At the end of the day, revenue numbers cannot capture the full extent of the App Economy…not in a world where there are so many other ways for apps to earn their keep.

 

 

 

Comments

  1. The article addresses a very important point. The value of an App goes beyond its price. It would be a mistake to assume that because Google does not charge for its apps, they therefore have no value.

    When I think about what apps have become, I am reminded of the time when the Internet was very young, and companies were just beginning to notice websites. At first, for many a website was a “me too” thing that was little more than simple advertising for the bricks-and-mortar business. The value of websites was questioned then, just as the value of many apps are today. It seems to me that where apps are concerned, we are in a similar exciting period of invention and reinvention, as the potential of apps to serve customer needs and corporate coffers is realized.

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