mobile programmatic advertising platform OEMs & Carriers Rising Role in the App Economy
If it seems like everyone has a smartphone these days, it’s because everyone does. Smartphone penetration rates around the globe are at an all-time high, and projections show 36% of the world’s population (4 billion people) will own at least one smartphone by 2020.
Despite the advanced technology found on the devices in our pockets, smartphones are next to useless without the ability to download and run applications. According to a Sensor Tower report, more than $86 billion was spent on app downloads in 2017 alone.
The number of global app downloads is only expected to grow, especially in emerging markets like India and China, where downloads have surpassed 215% growth over the past two years. This information is important because it establishes mobile apps as one the most influential and powerful global industries to date.
As global app revenue continues to rise and download numbers skyrocket, the global app economy is projected to change and shift substantially. In response to the projected change, OEMs (Original Equipment Manufacturers) and telecom carriers are into meeting related consumer demands and means to monetize them.
What is the App Economy?
Forecasts indicate that change to consumer demand is coming to the global app economy; but what exactly is the app economy, and how does it affect end users and developers? According to Techopedia, the app economy refers to,
“the range of economic activity surrounding mobile applications… encompassing the sale of apps, ad revenue or public relations generated by free apps and the hardware devices on which apps are designed to run.”
The value of the app economy is derived from consumer markets and enterprise applications. According to the State of the App Economy Report, as of 2018 the app economy is valued at $950.6 billion.
The app economy also includes 4.7 million developers, software engineers, system managers and teachers, accounting for more than 444,000 computing jobs in the United States alone.
What Trends are Affecting the App Economy?
Several trends converged in 2019 which are projected to have a significant impact on the app economy.
Stronger Focus on Customer Engagement
Customer engagement on mobile devices has changed significantly in the last 5 years. OEM’s and Telecom carriers have responded with a shift in app engagement strategies. Focused on generating a “lifestyle experience,” OEMs and telecom carriers are developing markets that generate new revenue streams, eliminating their commitment to markets that are no longer profitable.
One such market is the gaming category, which have experienced a sharp decline in popularity and has been mostly absent from the “Top 5 Grossing” app positions for the last year. Video is now the dominant form of content streamed to mobile devices.
App Store Saturation
The app store is a direct-access marketplace that connects app users and app developers. The app store is critically important to the global app economy because it enables developers with a marketplace where they can engage with users directly, without interference from manufacturers of mobile devices, otherwise known as OEMs.
However, as the number of smartphone users continues to grow, app stores are becoming oversaturated. Despite the growing number of app downloads, developers are struggling to distinguish their apps from the rest of the pack.
According to mobile app marketing trends, there is now a combined 10 million apps available to consumers between the various app stores. As a result many app developers are flocking to smaller app stores like Amazon Appstore, GetJar and Appolicious as alternative channels to reach new users. OEM app stores also emerge as alternative with leading players such as Samsung and Xiaomi that accelerate their efforts to become a more dominant player in app economy, attracting growing number of apps.
However, the shift in strategy may be too late when you consider historically spotty mobile service in emerging markets. Combined with the rise of streaming video, the explosive growth of mobile advertising and the saturation of the app economy – A situation develops in which the app store’s function has largely changed.
Trends suggest a marketplace dominated by a small number of successful apps who have effectively secured the entire market for themselves. Apps like Facebook, Lyft and Amazon continually grow their audience via the different app stores, but few users are likely discovering those apps for the first time.
Instead, we find an app store that functions like an archive, where in users already know which apps they would like to download.
What is the Role of OEMs in the App Economy?
The top OEMs (original equipment manufacturers) for mobile devices are Samsung, Huawei, and Apple, closely followed by global brands like Oppo, Vivo, Xiaomi, Lenovo/Motorola and LG. OEMs are critical to the app economy, playing a significant role in determining how, when and why mobile devices are used.
Prior to the development of the app store, OEMs played a larger role in determining which apps were pre-installed on their devices, and which apps could or could not be downloaded by the user. As mentioned, some OEMs also promote their own app stores, yet generally experiencing has limited success due to various reasons: Limited app offering, low attractiveness for developers, lack of domain expertise, etc.
How is That Role Expected to Change?
The ultimate decision as to what apps will be downloaded to a device may be influenced by OEMs (e.g. pre-install), however research suggests consumers are becoming more and more picky in how they search for apps on their mobile devices.
OEM’s are adapting to the oversaturated app economy by distributing their new technology directly into the hands of their users.
Peer-to-Peer App Sharing
Peer-to-peer app sharing platforms are on path to outpace app stores as the new form of discovery, especially in markets with limited internet availability.
According to Rajeev Dhal , Vice President of SHAREit India, “this form of app discovery has its intrinsic benefits over inorganic downloads and it is now touching millions of users across all continents.”