Apps modernize global economy

By | Business
Millions of people and business around the world use apps on a daily basis credit via ZBW Leibniz-Informationszentrum Wirtschaft@Flickr.com

Since their infancy apps have exploded on a global scale, with the EU’s app sector currently worth €17.5billion. By 2018 it could employ 4.8 million people and contribute €63 billion to the EU economy according to a study carried out by GIGAOM and NUI Galway for the European Commission.

Today the app economy employs 1million developers, and 800,000 people in marketing and support posts. This could rise to 2.7million developers and 2.1million support staff by 2018. EU buyers and advertisers spent €6.1billion on apps in 2013, 30% of total global app spending, with this potentially growing to €18.7billion in 2018. Consumer spending combined with advertising and contract work could lead to an annual revenue of €63billion for the app sector within five years.

Currently, EU and North American each developers generate 42% each of app revenues in EU and US markets. Although the future looks promising, developers have noted issues about the skills gap, connectivity and fragmentation, which could mean the app boom coming to a close.

Some believe there is a shortage of digital skills with roughly 38% of independent and in-house developers saying EU businesses had issues competing with US salaries. Whilst around 30% said of developers said startup developers required more business expertise, and a quarter of all surveyed said there should be more developers. Also, surprisingly, only 9% of developers are female.

The five most successful EU app companies represent 49% of the appearances of EU companies in the top 50 grossing apps in the EU and in the U.S. All of these companies are game companies, reflecting the game bias of the app economy. The first, second, and fifth-ranking companies King.com, Supercell, and Rovio, are all Nordic, indicative of the tech focus of these countries’ economies.

In the US, from 2007 to 2012 the app economy has created about 466,000 jobs, according to a survey by TechNet. California took the biggest share of the growth, claiming 23.8% of app-related jobs. The New York, northern New Jersey and Long Island areas topped the regional list with 9.2% of app-sparked growth.

The success of EU app companies seems to be situated in the same areas in Europe, with only Germany, France, and the U.K. having any meaningful number of app companies that are successful outside of their native markets. Some countries such as Italy have no app companies with apps featuring in the top 50 slots outside of their domestic markets.

Recently, we have seen how much one app can go for with Facebook acquiring WhatsApp at a cost of £11.4billion. WhatsApp has over 450 million users, with 70% of these active each day. In a staggering comparison, Facebook also notes that the messaging volume of WhatsApp approaches the SMS volume of the entire global telecom industry. Plus, WhatsApp is estimated to be gaining 1million new users a day. Mark Zuckerberg, Facebook founder and CEO said, “WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable.” The company notes that it only has 32 engineers, making the ratio 1 engineer to every 14 million users. It processes 50 billion messages a day across seven platforms. Facebook currently boasts 556 million mobile daily active users. One particular reason Facebook could be purchasing WhatsApp is to bolster its international footprint.

In 2013, we downloaded 10 apps for every single woman, man, and child on the planet. Half of these apps were Android apps, which have 58% of the smartphone app share, according to ABI Research, whilst 41% of these will be iOS apps. Apple’s iPhone will account for 33% of smartphone app downloads, ABI says, while the company’s iPad will take 75% of tablet app downloads. Windows phone and tablet devices accounted for the majority of the rest, with BlackBerry taking about a 2% share.

Which apps do you use in your daily life and have they changed or improved your lifestyle or work?

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