With billion dollar valuations aplenty, the so-called ‘app economy’ is responsible for a lot froth in the modern tech industry. But is it all downhill from here? A new report suggests that our interest in apps might be falling, with nearly a third of UK smartphone owners not bothering to try a single piece of new software during a typical month.
The change is due to a number of factors, including the growing number of older users in the market and the fact that many of the apps we have are simply good enough already.
“When you had 20 per cent of people with smartphones they were mainly early adopters,” explains Paul Lee, head of research for technology, media and telecommunications at Deloitte. “But the law of averages means that the more people you get the less enthusiastic their behaviour is going to be.”
Research from Deloitte suggests that even for customers who still bother to explore Google Play or Apple’s App Store, the number of downloads a month has fallen from an average of 2.32 in 2013 to just 1.82 in 2014. To make matters worse, the report suggests that nine out of ten of us never spend money on apps at all.
However, Mr Lee stresses that the declining number of downloads is only “one facet” of the market and that people are still using apps, with many of having settled with the ones we want.
“The best apps get updated all the time, it’s not as if you have a static piece of software,” he told The Independent. “It will be upgraded to cope with the latest phones, with the latest operating system. So what you have for these companies is the benefit of being an incumbent. It just makes it harder to occupy that same space.”
“People will have up to 30 apps they’ll use on their phones and they’ll use, say, 10 of them on a regular basis. It’s the same way people have an enormous amount of TV channels to choose from but they only end up using the main channels.”
This is bad news for independent developers looking to challenge billion-dollar tech companies, but Mr Lee says insists there’s still room for innovation in the market, especially as advances in hardware opens up new functionality.
He points to the invention of the new Bluetooth LE standard, which allows low-energy pairings between mobile devices and other bits of hardware. Bluetooth LE has already helped fuel the rise of wearable fitness trackers and associated health apps, and is predicted to move into the retail space next, offering users proximity-based notifications on products and offers.
However, this isn’t to say that the ‘app economy’ is stable – but just that it’s always been a dangerous tactic to bet on rapid growth. Last week British game company King lost more than £1 billion in its market valuation as consumers got bored of its flagship title Candy Crush Saga.
King’s declining fortunes have drawn comparisons with Zynga – a San Francisco-based ‘social gaming’ outfit that rose to fortune with its Facebook smash hit Farmville, but suffered a similar fall, first in interest and then revenue. Whether on social media or smartphones, rapid growth powered by word of mouth can be powerful – but this sort of interest can vanish just as quickly as it appears.