Apps Will Make $15 Billion, Garner 17 Billion Downloads In 2011

Android Market

People love to talk about the rise of the mobile web, but today, apps are where it’s at when it comes to mobile content, and they are very much still on the rise. This year will see them collectively making more than $15 billion in revenues on downloads of more than 17 billion, according to Gartner. That’s a far cry from how much mobile operators or handset makers get in sales: just one operator, Verizon, made $16 billion in wireless revenues in Q4 alone; and Apple (NSDQ: AAPL) made $250 million in gross commission from apps in the second half of 2010, but total revenues were almost twenty times that, according to one analyst. Still, apps are at an all-time high, with 2011’s revenues representing growth of more than 190 percent on 2010’s revenues of $5.2 billion, and growth of over 1,000 percent between 2010 and 2014.

Gartner says that 17.1 billion downloads for 2011 works out to a growth rate of 117 percent compared to 8.2 billion downloads in 2010. Collectively, we will have downloaded an astounding 185 billion apps by 2014, taking the launch of the first app store — Apple’s — in July 2008 as where the analsyts started counting.

Doing a rough calculation based on the world’s population projected to be 7 billion in 2011, that works out to 26.4 apps per person downloaded over six years. That’s assuming everyone in the world has a smartphone or app-friendly feature phone — so the average number of apps per user is actually significantly higher. Some more notable points:

Tablets will see more growth than handsets. Interesting to note that Gartner believes the average number of downloads per mobile handset will remain steady over the period and it will be tablets that drive the average number of apps per device.

It’s not all about Apple. (But mostly it still is.) Gartner notes that other app stores like Nokia’s Ovi, RIM’s App World, and Android Market and Microsoft’s Marketplace are “gaining traction” in the market, with more downloads across the board. But Apple is still ahead by a long shot. In 2010, Apple accounted for nine of every 10 app downloads worldwide and Gartner believes it will remain the single biggest store until 2014.

Free still dominates. Gartner says 81 percent of all mobile application store downloads in 2011 will still be free, although the percentage has been declining since 2008. The number of free downloads will continue to decrease this year but will rise again between 2012 and 2014. (We are reaching out to Gartner to ask why.)

What Gartner leaves out. There are some other trends that we’re seeing in mobile apps that might also impact revenues.

Carrier billing. Gartner notes that typically app revenues are split 70/30, with the bigger share going to the developer and the smaller share going to the store owner. Advertising will make up a third of revenues from app stores by 2014, up from 16 percent in 2010. But we are starting to see more examples of carrier billing come into the mix that may change that.

Just this week, Telefonica’s O2 Germany said subscribers would be able to bill Bada apps to their bills, with another “major” platform, probably Android, also joining the billing party later this year.

And yesterday, Eric Chu, the group manager for the Android platform at Google (NSDQ: GOOG), noted that in-app payments would be coming to the Android Market, and it was likely that Android in-app payments would be integrated with carrier billing, too, which he called “one of the lowest-friction models” in the business.

While that will certainly mean at the least one more party benefitting from the app boom (the operators) it may also end up contributing to more sales, if it turns out that it’s easier or if users feel safer to charge a payment to their mobile bill instead of to a credit card.

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