For the iPhone App Store, Future Holds Chaos & Opportunity

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. 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 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.

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