Free apps will account for 89 percent of total downloads in 2012, according to Gartner, and will increase their share of the total app market further over the next four years.
 
The research firm this week released a report forecasting that worldwide mobile app store downloads will surpass 45.6 billion in 2012, with free downloads accounting for 40.1 billion, and paid-for downloads totaling 5 billion.
 
“In terms of the apps that consumers are buying, 90 percent of the paid-for downloads cost less than US$3 each,” said Sandy Shen, research director at Gartner. “Similar to free apps, lower-priced apps will drive the majority of downloads. Apps between 99 cents and US$2.99 will account for 87.5 percent of paid-for downloads in 2012, and 96 percent by 2016.”
 
Gartner expects Apple’s App Store to have more than 21 billion downloads in 2012, which is an increase of 74 percent over 2011 and indicates continued strong demand for mobile app content.
 
Mobile App Store Downloads, Worldwide, 2010-2016 (Millions of Downloads)

Source: Gartner (September 2012)
 
 
On the subject of monetisation, Gartner said that using an in-app purchase business model is a more effective method of converting casual app users into paying customers and then retaining them with good user experience and continued product updates. This is a different approach from upfront payment where users pay and download, and can be disappointed by the experience and never come back. “In-app purchasing opens the door to a recurring revenue stream for developers, but app performance and design will always be the most important factor when attracting new users and keeping them satisfied,” notes the research firm.
 
Gartner claims in-app purchases will drive 41 percent of the store revenue in 2016. While the market is moving toward free and low-priced apps, in-app purchases will drive downloads as well as app store revenue. Gartner expects the number of downloads featuring in-app purchase will increase from 5 percent of total downloads in 2011 to 30 percent in 2016, and its contribution to the store revenue will increase from 10 to 41 percent in the same period.
 
“App stores should support in-app purchases as soon as possible as this offers a new path of monetisation, and helps to attract developers as they attempt to extend an app’s momentum by providing easy access to upgraded services and functionality,” said Brian Blau, research director at Gartner.
 
Overall, the app market will see phenomenal growth over the next four years, rising from 45.6 million downloads in 2012 to 309.7 million in 2016. Of that 2016 figure, 93 percent will be free apps.