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For the iPhone App Store, Future Holds Chaos & Opportunity

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mobileadsales2009Omar Hamoui, founder and chief executive of AdMob, a San Mateo, Calif-based mobile advertising network, is in a unique position: With nearly 20 percent of his 2 billion monthly ad impressions coming by way of the iPhone and iPod touch, he can offer deep insights into the devices’ application ecosystems.

His company helps monetize many iPhone applications by giving them the ability to embed advertisements. With many more app writers waiting in the wings, Hamoui thinks that there will be a big surge in the number of available apps on the iTunes App Store.

This is going to cause some challenges not only for app developers, but also for Apple (s appl). After all, as he noted: “How do you discover apps when there are 100,000 apps in the iTunes store, vs. 25,000 at present?” Hamoui stopped by our office yesterday and I asked him a few questions. Here are some key points of note from our video conversation, which is available in its entirety below the fold:

  • In two years, the App Store will be a $5 billion business.
  • Apple’s App ecosystem is going to follow Facebook’s path — mundane apps will have to give way to more useful ones.
  • App developers have to lose the “quick hits” mentality and instead focus on building quality, lasting apps.
  • Introduction of an Apple payment system is going to create an opportunity for more subscription-driven apps.
  • Google’s (s goog) Android-based phones show iPhone-like qualities in terms of user engagement with applications and mobile ads.

These trends are only helping the Sequoia Capital-backed company capture part of the fast-growing mobile advertising market. MAGNA, a market research firm, forecasts that the U.S. market for mobile advertising will grow by 36 percent in 2009, rising from $169 million in 2008 to hit $229 million.

9 Responses to “For the iPhone App Store, Future Holds Chaos & Opportunity”

  1. Great piece, Om – Omar’s exactly right about the app discovery problem. We’ve just shipped a product that takes a swing at improving app discovery by tapping the wisdom of the blogosphere (your blog network included). It’s called AppStoreHQ, and – like The Hype Machine in music – we help iPhone owners discover the most-talked about apps among a select list of knowledgeable analysts. If you have a sec to kick the tires I’d love to run you through our plans and get your feedback.


  2. The coming times will definitely see some kind of buoyancy in advertising market but to si.ngle out that mobile telephony will make definite strides in 2009, is beyond any reasoning, It is true that situation has bottomed out and the coming period can only see a northwards movement