Ina Fried

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Gartner Sees Mobile Apps Generating $15 Billion in Revenue in 2011

A billion here, a billion there and pretty soon you are talking serious money.

That’s the conclusion from a new Gartner forecast that predicts mobile apps will produce $15 billion in revenue from sales and advertising this year–nearly triple last year’s still-not-shabby $5.2 billion.

“Many are wondering if the app frenzy we have been witnessing is just a fashion, and, like many others, it shall pass. We do not think so,” Gartner research director Stephanie Baghdassarian said in a statement. “We strongly believe there is a sizable opportunity for application stores in the future.”

The company sees that revenue reaching a whopping $58 billion by 2014. (The forecast covers apps that are directly sold and not other kinds of media content such as ringtones and wallpapers.)

However, Baghdassarian noted that the challenge from Web-based apps will intensify as mobile browsers improve and the Web adapts to the growing base of Web-savvy phones.

“Applications will have to grow up and deliver a superior experience to the one that a Web-based app will be able to deliver,” Baghdassarian said. “Native apps will survive the Web enhancements only when they will provide a more-personal and richer experience to the ‘vanilla’ experience that a Web-based app will deliver.”

Advertising is poised to become a bigger piece of the revenue, Gartner said, climbing to nearly a third of revenue from apps by 2014, roughly double last year’s 16 percent.

Apple announced this week that 10 billion iPhone apps had been downloaded from its store. Apple’s lead in the store arena is poised to continue, but narrow in the coming years, Gartner said.

“We estimate that Apple’s App Store drove close to nine application downloads out of 10 in 2010 and will remain the single best-selling store across our forecast period (through 2014), although to a lesser extent, as other stores manage to gain momentum,” said Gartner Vice President Carolina Milanesi.


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