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Summary:

With a significant number of the 150,000 apps in Apple’s App Store set to be available on the iPad from day one, the market for paid tablet apps alone is expected to top $8 billion within just five years.

Apple, with the iPad, has lit the fuse on an entirely new category of mobile devices: the tablet. Everyone from gamers to developers (even, ostensibly, dead communist leaders) are pondering its possibilities — especially publishers and media barons, who see a savior when it comes to helping readers find, consume and buy media.

At the heart of this opportunity lies the app. With a significant number of the 150,000 apps in Apple’s App Store set to be available on the iPad from day one, the market for paid tablet apps alone is expected to top $8 billion within just five years.

It wasn’t too long ago that the term “app” conjured up images of fried finger food, not software. But that all changed when Apple introduced its App Store for the iPhone and ushered in the modern day mobile app economy.

And now that economy is set to grow even larger with the launch of the iPad. As I’ve detailed in a new report on GigaOM Pro (sub req’d), tablet app downloads and consumption will be significant.

How big do I forecast the market for tablet apps will be?

  • The paid web tablet app market will grow to top $8 billion by 2015 from just $183 million in 2010
  • Downloads of paid apps will represent a bigger percentage of the overall app pie as compared to those for phones. In 2011, 179 million paid apps will be downloaded, and by 2013 that number will reach 630 million.
  • Downloads of apps (both paid and free/ad-supported) will grow to total more than 12 billion by 2015 from 272 million in 2010

And remember: That $8 billion is only for paid apps on tablets. When you consider that other forms of app monetization will include advertising (why Apple bought Quattro Wireless) and free apps tied to content subscriptions (think Netflix Watch Instantly) or content downloads (such as, say, a Kindle app), the web tablet app economy will actually be much bigger.

Will this market be Apple’s alone? Of course not. In fact, I expect both Google and Microsoft to offer strong alternatives. That said, I forecast Apple and the iPad to be the web tablet market share leader throughout the forecast period. By 2015, I expect the web tablet market to be a 43-million-unit-per-year market.

Web Tablet App Forecast — GigaOM Pro
View more presentations from Gigaom.

Read the full report here.

  1. Some bold prediction on the revenue side for the ipad in terms of the sales from the apps. I see most of the success coming from subscription from newpapers and magazine on the ipad, it just makes so much sense and as the media print really dives down to a hault, I can see users subscribing to newpapers on the ipad.
    Apple will for sure reinvent the tablet market as it has reinvented other sectors
    What a great and innovative company

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    1. @Sanjay – I think you’re absolutely right about iPad doing well for newspaper and magazine subs – many of which won’t see direct up-front monetization through a paid app, but rather on the backend through subscription fees and even sell-through of other premium content through the app.

      Still – there is alot of room for paid apps outside of magazine/news. The game market alone will be a big one, as I think you’ll see a signficant number of so-called “AAA” titles go to the iPad and tablets, and the ones who should be worried in that regard are Nintendo and Sony, who probably own the vast majority of non-casual gaming revenue for the mobile/non-home console market.

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      1. I can think of two scenarios where this scenario could be met and exceeded. Value added information in vertical markets are ripe for these devices. Secondly, applications on such devices will be more costly. Look at iWork, and think of Office applications. Microsoft could easily charge $99.

        The value proposition is larger on tablets for all the obvious reasons.

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  2. TPS reports lives!
    Look, I already ordered my iPad. Love my iPhone and all its apps. Assume apps will be a big deal.

    But — we didn’t even have iPhones 5 years ago. I am not seeing anything in your presentation that isn’t 100% speculation.

    Why not just say $5 pajillion.

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    1. Brian – any forecasting of future markets is somewhat speculative, but we have some data on usage, downloading and monetization of apps from smartphone apps markets, and we can make assumptions – as I did – around usage of apps, frequency of downloads, percentage of paid apps, etc based on existing models.

      I think if people said 2 years ago 3 billion apps would be downloaded on the iPhone, you would have said same thing. At least now we know how consumers consume apps, and can make some reasonable assumptions around how things may be with the iPad and web tablets app usage.

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  3. “Apple, with the iPad, has lit the fuse on an entirely new category of mobile devices: the tablet.”

    Apple may, and probably will, make them more popular. But tablets have been around for most of the past decade.

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    1. @Bob – yes, you are right. They have been around – but the real “fuse” being lit around this market is the iPad; the tablet market today isn’t a volume market, but will soon be.

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  4. I think the number of Apps for sale on ‘opening day’ for the iPad is going to be a big indicator of how the iPad is going to received. When the iPhone arrived there weren’t that many Apps around – my guess is the iPad is going to launch with a large number already available, and more on the way. Apple is pushing developers by email to get Apps in by 27 March for the launch. I for one have been busy the past 4 days on a 1 App in 7 Days challenge (http://mmisoftware.co.uk/weblog).

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    1. @NickMMI – agreed – Apps available on day one will be important – both those written specifically for the iPad and the large number of iPhone/Touch apps that will be available for iPad.

      The tough part for you and other developers, at this point pre-launch, is you don’t have an actual device to test it on!

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  5. [...] original here: iPad to Kick-start an $8B+ Tablet App Market: Report – GigaOM   Uncategorized   and-, are-pondering, dead-communist, entirely-new, [...]

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  6. The predictions sounds reasonable, and possible understated. I would double all the numbers. Wish I could get the full report, this sounds very interesting.

    Lastly, I think Bill Gates was right, tablets will be bigger than PCs in 5 – 10 years. And I am glad Apple is leading this “revolution”.

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  7. Charles Edwin Tuesday, March 23, 2010

    Michael,

    Do you think the iPad will offer a version of iTunes that will make it easier to navigate through the multitude of apps? With a larger screen and more place to tap, it is logical that Apple could offer more innovative ways to find apps. Thanks for your answer.

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    1. @Charles – App discoverability, recommendation and search is going to be an ever bigger challenge as the number just keeps growing. I think tying app markets to social circles for friends and recommendation is one way they could go (friends recommendations is, after all, how we find things we like in the “real world”). It’s an important area where they will need to keep the eye on the ball.

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  8. Constable Odo Tuesday, March 23, 2010

    Yeah, but I’m only interested in how much of that $8 billion is Apple going to take. Forty to fifty percent would be great.

    I can see Android tablets getting some decent market share, but I just can’t imagine how those Windows 7 tablets are going to get any market share. I really don’t see any reason for Windows 7 users to jump from a netbook to a tablet that will likely cost more.

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  9. [...] Michael Wolf at GigaOm decides he shall outdo the iPad cuddlers and magic surface strokers – The paid web tablet app market will grow to top $8 billion by 2015 from just $183 million in 2010. [...]

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  10. [...] for paid apps. Other apps will be monetized with advertising. That is a pretty big new market.Here is the link to the [...]

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