Application development market will grow to $100 billion in 2015

GERMANY: The development service market today is already twice as big as the app download market.

The market for app development services, including application creation, management, distribution and extension services, will grow in value to S$100 billion in 2015. In only a year and a half after the launch of the Apple App Store the application developer market overtook the app download market in revenue size.

“With increasing smartphone and application penetration, companies have a vital need to be in this market and fuel the demand for app development services,” states Egle Mikalajunaite, senior research analyst at research2guidance.

The number of applications developed by third party application developers represents 66 percent of all applications. This share will increase over the next years, as more and more companies want to publish applications but don’t have the resources in-house.

Most developers started out as publishers, but the increased level of competition in the main app stores, along with high failure rates, made more and more application developers alter their business model. Concentrating on developing applications for third parties, as opposed to creating their own applications, was seen as a more profitable business alternative. “Selling the spades became a much more reliable and bigger business than digging for the gold” describes Ralf-Gordon Jahns, research director at research2guidance.

Today, most app project revenue is generated from app creation services (concept creation, design and coding). In 2010, app maintenance, analytics, distribution and extension services constituted merely 2 percent of earnings. “The need for additional services is growing and this share will grow significantly between now and 2015. However, app development will remain the core part of app project costs” explains Daniel Meehan, research analyst.