While most smartphone users spent less than $100 on mobile applications last year, 16.5 percent doled out somewhere between $100 to $500 on software, topping the cost of their mobile handset, according to a new ABI research survey.
The amount of spending is significant, as most applications range from a few dollars to the about $25, said the research firm. The data released today was collected as part of an in-depth study ABI conducted on mobile application storefront trends.
The spend level should continue to increase as wireless carriers, handset makers and developers make it even easier for users to discover software offerings, ABI Senior Analyst Jeff Orr told InternetNews.com.
“Most consumers are still discovering how their device use can be expanded and customized. A fair amount are still not aware of capabilities new software can provide,” Orr said.
The news bodes well for smartphone players aiming to launch new storefronts in the competitive quest to lure new users. Increasingly powerful devices and improvements in hardware design, such as the touchscreen popularized by Apple’s (NASDAQ: AAPL) iPhone, have also further encouraged software development on the platforms, which in turn entice buyers seeking mobile games, tools and productivity applications.
Research in Motion (NASDAQ: RIMM) will debut its first official BlackBerry storefront next month. RIM has said it is working with its mobile carrier partners to create customized, on-device application centers for subscribers.
Microsoft (NASDAQ: MSFT) is planning an “online bazaar” for applications running on its Windows Mobile operating system. The Windows Marketplace for Mobile will provide applications downloadable directly to users’ Windows Mobile devices.
Last December, Palm opened its Software Store, an online application download center stocked with 5,000 applications for over 25 Palm devices. Google’s Android Market, which opened last October with free content, just began accepting paid applications last week.
Such app centers are viewed as a quick and easy path to getting software to market and for cementing user loyalty. Apple’s iPhone App Store, which revolutionized the mobile application storefronts when launched last summer, is often cited as the most successful, given the number of downloads and application offerings.
As of January, App Store offered 15,000 applications, with downloads hitting 500 million.
Orr, who acknowledged that Apple’s successful iTunes storefront strategy created a halo effect that benefited even competing smartphone software efforts, noted that both Palm and RIM still boast bigger software catalogs with over 80,000 in play for each.
“Apple did a lot for the market with its massive marketing effort and device manufacturers and content developers on non-Apple platforms all saw a bump in sales because there is now more awareness of the smartphone category,” Orr said.
“But Apple is also seen by some as hurting the market,” added Orr, as the average content price is between $1 and $2 per application at the App Store. By contrast, other platform applications range from $7 to $25, he said.
Going forward, it won’t be price or even content depth that will be key, said the analyst. The big element will be providing an easy discovery path for finding applications, said the analyst.
“Don’t just take the size of a platform’s software catalog as an indicator of success,” said Orr. “The application storefront challenge is in making sure users know its exists and making it as easy as Apple has done with the device’s icon to connect directly to the storefront.”
