Consumer App Spend Grew 45% In The First Quarter Of 2017

David Bolton David Bolton
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The myth of peak app remains an urban legend.

The seemingly never-ending growth of the apps economy is soaring to new heights.

The latest quarterly report by mobile analytics company App Annie said that the first three months of 2017 was a record-breaker for global app installs and consumer spend. Google Play remains the leader in terms of installs, but—as ever—the App Store is the place where cash is king.

Installs over the two main app stores recorded a year-on-year increase of 15%, totaling almost 25 billion worldwide. Gross consumer spend in Q1 2017 had an annual growth rate of 45%, with iOS and Google Play generating over $15 billion in revenue. The install number is even more impressive when you take into account that App Annie’s data only highlights new downloads and does not include re-installs or cumulative downloads from previously recorded quarters.

World Wide App Downloads by Store Q1 2017

iOS Still Makes More Than Android

The app store status quo remains unaltered, the report said. Google Play had a 135% lead over iOS for installs in the first quarter of 2017, but the gap between Google Play and the App Store in terms of revenue is now 100% in favor of Apple.

Consumer spend in the first quarter of the year in the App Store increased by 45%, compared to 40% for Google Play. China was a major contributor to Apple’s continued dominance of consumer spend and will remain the largest single market for iOS spend for at least the next four years, the report said.

Total revenue over both app stores is expected to be over $82 billion by the end of 2017, with global consumer spend predicted to be $139 billion in 2021, according to App Annie’s Market Forecast 2016-2021. If the company’s crystal ball is right, then it becomes fairly obvious that the app economy is still some way from peak app.

“Q1 2017 saw record levels of downloads and consumer spend in the app economy, with particularly strong growth in consumer spend across both stores,” said App Annie’s senior market insights analyst Lexi Sydow. “With app stores showing undoubtedly healthy growth, one thing is certain: The app economy is nowhere near peaking. Apps are an integral part of consumers lives across the world. Businesses need to adapt to this mobile-first world or be left behind in this booming economy.”

Emerging Markets Will Drive Apps Economy

Google may not be able to match Apple’s cash generation, but it can claim the moral high ground in terms of installs. The fragmented nature of the Android ecosystem has always weighted install rates towards Google, with Android the operating system of choice in emerging markets.

The reason for the gap in install rates between Google Play and the App Store is credited to the increase in device ownership in regions like the Indian sub-continent. Google Play showed a year-on-year growth rate of 20%, thanks to Indian device owners trying out new apps, the report said. Install rates in the App Store were also healthy in Q1 2017, although year-on-year growth was only 5%.

“Smartphone penetration in India is below 30%, which paints a rosy picture of long-term growth,” said App Annie. “As more consumers adopt smartphones, we expect India to continue to contribute significant download growth in the quarters to come.”

The Smartphone Industry Just Keeps Growing

App Annie’s “rosy picture” of the smartphone sector is backed up by IDC’s Worldwide Quarterly Mobile Phone Tracker report.

Smartphone shipments may have slowed in recent months, but there were still 347.4 million devices shipped in the first quarter of 2017—a year-on-year growth rate of 4.3%. The apparent saturated nature of the market has not lessened consumer demand for both flagship and affordable smartphones, with IDC’s report noting that the smartphone industry still has room to grow.

“Despite all the popularity and media hype around premium devices, we continue to witness a shift in many companies’ portfolios geared towards affordable devices with premium-type styling compared to flagship models,” said IDC research manager Anthony Scarsella, in a press release. “Companies have started to implement a single premium design language that ultimately blurs the lines between the high-end and the low-end, allowing the average consumer to jump on the brand without a hefty upfront investment.”

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