Mobile application downloads across all handset types are expected to increase from more than 7 billion downloads in 2009 to almost 50 billion in 2012, a year-on-year growth rate of 92 percent.

In addition, the global mobile applications economy is set to be worth $17.5 billion by 2012, according to an independent report commissioned by GetJar, which claims to be the world?s second-largest app store. This would mean that the value of applications sold would be greater than the value of CDs sold in 2012?$13.83 billion, according to world music trade body IFPI April 2009.

?Over the last 6-to-12 months, there?s been a lot of talk about mobile apps and smartphones, a lot of excitement, and we wanted to give a more global picture of the entire apps economy, not just developed countries but also developing countries, not just smartphones but also feature phones, not just the off-deck app store business but also the carrier business,? said Patrick Mork, vice president of marketing at GetJar, San Mateo, CA.

?We?re trying to take a more holistic approach and arrive at a number of the downloads that takes into account all those different regions, platforms and models,? he said. ?The market for mobile apps by 2012 is actually going to be larger than the current market for CDs, which is pretty amazing if you think about it.

?Based on our findings, the entire apps economy is going to be worth about $17.5 billion by 2012, which is a pretty significant achievement for an industry that a few years ago was nonexistent.?

To understand the potential of the global mobile applications economy, GetJar commissioned independent consulting firm Chetan Sharma Consulting to lift the lid on the rapidly expanding global applications market.

The goal of the research study was to quantify the global mobile applications market by taking a holistic view from specific data in the market.

To build an effective framework for analysis, Chetan Sharma Consulting built a grounds-up model that took into account how the overall applications consumption is evolving across all dimensions?on-deck (offered on carrier deck), off-deck (outside the carrier deck or offering though they still might play a role like in billing or marketing), smartphones, feature phones, paid, free, advertising-based and virtual-goods-based.

The model focused on applications consumption by five major regions: North America, Europe, South America, Asia, and Middle East and Africa.

The aim of the project was to analyze the potential and real value of the mobile applications market worldwide using first-hand data.

Apps galore
Chetan Sharma Consulting is projecting between 14 and 15 billion mobile application downloads this year, with revenues somewhere north of $6 billion in 2010.

In terms of volume, the number of downloads,  the firm is estimating that the market is going to be 50 billion downloads by 2012, up from 7 billion downloads last year.

It is clear that by 2012, off-deck paid-for applications will be the biggest revenue generator, accounting for almost 50 percent of all applications revenue.

By comparison, in 2009, on-deck applications available from carriers accounted for more than 60 percent of all applications revenue, but this will fall significantly to just under 23 percent by 2012.

The study outlines opportunities for both high-end smartphones such as BlackBerry and Android-powered handsets and feature phones such as the Samsung Instinct/Jet and Nokia X6.

In 2009, 90 percent of handsets in use worldwide were so-called feature phones, while smartphones and data cards accounted for the remaining 10 percent of the market.

In some regions such as North America, uptake of smartphones was much higher?more than 20 market share?than other regions?3 percent in Middle East/Africa.

The line between powerful feature phones and smartphones is blurring as consumers demand powerful yet cost-effective devices, effectively expanding the applications revenue opportunity across a much broader range of handsets.

Global apps economies
Applications economies are evolving differently worldwide, suggesting a need for greater focus on developing different applications business models, as opposed to a one-size-fits-all approach.

For instance, the average application selling price (ASP) in North America was $1.09, significantly higher compared to ASPs in developing markets such as South America ($0.20) and Asia ($0.10).

At the same time, post 2012, application downloads in developing regions such as Asia may eventually exceed those in Western regions, although monetisation of these downloads will require different business models?advertising, virtual currency?than those seen in developed markets.

The revenue opportunities in Europe are set to soar from $1.5 billion in 2009 to $8.5 billion in 2012, while in North America the figure will rise from around $2.1 billion to around $6.7 billion in 2012.

Currently applications are most popular in Asia, with the region accounting for 37 percent of global downloads in 2009.

However, while Asia had the highest number of downloads, users in North America spent the most money on applications, accounting for more than 50 percent of revenue.

Other findings from the research
Advertising based revenue models have become increasingly popular.

In 2009, advertising contributed almost 12 percent of the overall applications revenue.

However, this share is expected to more than double to over 28 percent by 2012 given the high proportion of prepay users in developing markets.

The battle of the application stores is well underway. In 2009 the number of app stores leapt from eight to 38, an increase of 375 percent. The number of application stores is expected to further increase in 2010.

The price of mobile applications can vary from $0.99 to $999?however, the average selling price in 2009 was approximately $1.90.

This is predicted to decrease by 29 percent over the next three years, although advertising revenue derived from applications is likely to stay relatively flat.

With the consumer appetite for mobile applications skyrocketing, the opportunities for developers are huge.

This report signifies a battle for survival of the fittest among app stores worldwide, with applications revenue and growth opportunities growing significantly, according to GetJar.

There is no way that this many app stores will survive in the long term and while the value of the global applications economy is set to be astoundingly high by 2012, only a few app stores will share this revenue.

The applications ecosystem is adjusting across multiple dimensions and thus expanding the revenue opportunities.

The growth in the quality of mobile advertising is also opening up new revenue streams for developers.

As the number of active data subscribers grows, we will continue to see the proliferation of applications in many directions on different device types.

Mobile apps vs. mobile Web
As mobile phones and their browsers get more sophisticated, will the increasingly sophisticated mobile Web reduce demand for applications?

?There is the ongoing mobile apps versus mobile Web debate: Which is better? Which is going to dominate?? Mr. Mork said. ?However, we?ve found that many people don?t necessarily differentiate between apps and the mobile Web.

?As mobile Web becomes more powerful, you?re going to be able to do more application-like things using your browser,? he said. ?As long as they have Nike or Facebook or their favorite brand on their phone, many consumers don?t care if it?s an app or a mobile Web site.

?What?s important is good content and being able to access that content quickly?it doesn?t matter if it?s from a browser or an app.?