Global Mobile Application Store Revenues – Smartphones & Tablets drive growth

According to ABI research, Total mobile app store revenues from pay-per-download, in-app purchase, subscriptions, and in-app advertising will rise over the next five years, growing from $8.5 billion in 2011 to $46 billion in 2016. Pay-per-download dominates the category but in-app purchase is also rising. ABI Research estimates that 29 billion apps were downloaded worldwide in 2011; up from 9 billion in 2010, the market growing at 12% month-on-month with nearly 36 billion apps downloaded in 2012 to smartphones and tablets. According to Strategy Analytics, 2012 Global mobile media revenues will be $150 billion, which will be 17% rise from $128 billion in 2011 and consumer spend will increase from $121.8 in 2011 to $138.2 billion in 2012 and advertiser spend will almost double from $6.3 billion in 2011 to $11.6 billion in 2012. Applications are forecasted to account for 19% of global consumer spend, or $26.1 billion in 2012, rising 30.7% from 2011. Revenues will remain relatively flat, music will continue to be a strong category, accounting for 11.6% of consumer spend, or $16 billion and video will account for just 2% of consumer spend globally. Apple’s App Store and Android’s Google Play are now big business with 32 billion apps expected to be downloaded in 2012 compared with 23 billion last year.

According to Juniper Research, more than 31 billion apps downloaded to mobile devices in 2011 and estimates consumer app downloads are expected to reach more than 66 billion per annum by 2016. Annual revenues from consumer mobile applications will approach $52 billion by 2016 as consumer smartphone adoption accelerates along with the emergence of tablet market. According to International Data Corporation (IDC), the global mobile app downloads are forecast to soar to 182.7 billion in 2015. By the end of 2014, Gartner forecast over 185 billion applications will have been downloaded from mobile app stores, since the launch of the first one in July 2008. According to May 2011 IHS Screen Digest, combined revenues from the four major mobile application stores run by Apple Inc., Google Inc., Nokia Corp. and Research In Motion Ltd. will leap 77.7 %in 2011 to $3.8 billion from $2.1 billion in 2010 and revenues will continue rising in the next few years, jumping to $5.6 billion in 2012, $6.9 billion in 2013 and $8.3 billion in 2014. The total number of downloaded applications in 2011 is expected to reach 18.1 billion by year-end, compared to 9.5 billion last year, 3.1 billion in 2009 and by 2014, downloaded applications will top some 33 billion.

Mobile Applications or Apps are specialized software that run on a mobile device such as mobile phone, MP3 Player, Tablet that performs or executes a specific task and the apps have been existed for several years on personal computers, but real fame for mobile apps is because of Apple Inc.’s App Store that has revolutionized the mobile apps world through its App Store on iTunes, a unique monetization model, that encouraged developers develop apps that educate, entertain and assist the mobile users in their day to day lives. Today there are many different apps like games, music, social networking, photo/video, productivity, entertainment, etc and there are more than million applications that are downloaded close to 20 billion times onto smartphones, feature phones, Mp3 players and tablets. Apple Inc’s App Store, Google Inc.’s Google Play (Merged Android Market & Music Service), RIM’s Blackberry App World, Nokia Ovi Store, Microsoft Windows Marketplace, Samsung Apps are the most popular apps stores. In fact availability of millions of apps has fueled the sales of smartphones and feature phones and developers are making money through a 70/30 revenue split where in developers get 70% of revenues & rest to app store owners. Mobile device makers too are including powerful chips, advanced software and hardware like advanced display screens, long battery life, etc so that apps can run smoothly and customers can easily access, install and use them easily.

App Stores are critical for smartphones and tablets success and developers need to be attracted and encouraged to develop applications that are bought and downloaded by consumers. Developers need to be provided with necessary software development toolkits, constantly be informed various updates being made to the core software code, favorable revenue splits and conferences have to be organized regularly so as to keep the interaction going and since past couple of years many application stores have been set up by various players, which also created a tough competition among the various stores to attract and retain their developers. Developers have to constantly develop and innovate new applications, work to add new features, improve app users experience, localize the app according to user’s regional background, culture, language and make the apps more users friendly to survive in the highly competitive market. App Store owners too have to tightly control the content, organize the store properly and the quality of applications on the stores has to be maintained to attract consumers and earn revenues. Since consumers are looking for accessing the various products and services they use through their mobiles and tablets, businesses are forced to include apps as part of their integrated multi channel distribution systems and apps help businesses to engage and retain consumers which are also fueling the mobile applications market.   

Developers and Content providers are actively looking for other storefronts other than the current App Store fronts and with development of technologies like HTML5 will allow them opportunity to offer apps that consumers download directly and install easily without the App Stores. The competition is further intensified with mobile operators and telecom companies are offering their own app stores for consumers and there is even more competition for attracting the developers. But in near future Apple App Store will dominate the market distantly followed by Android and the monetization of apps at stores other than Apple App Store is a major concern and in fact slowing down the App Store revenues growth. Pay per click and Pay per download models are loosing to In App Purchase models as consumers are more interested in free apps and content and are not interested in paying for apps upfront. Games dominate the market followed by music and social networking apps, but photo/video sharing apps and productivity apps are gaining prominence.

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Global Semiconductor Industry will continue its slow growth in 2012

Global Semiconductor Industry saw tremendous growth in 2010 post the global financial crisis as major semiconductor companies invested in manufacturing facilities to meet the raising demand from consumers fueled by sales of tablets, personal computers, datacenter server demand and mobile phones particularly smart phones. But the growth stalled in 2011 due to the volatile macro economic environment particularly the European Debt Crisis and the US economic slowdown, subsequent effect on other countries particularly nations like India, China, etc that saw slowdown in economic growth, natural disasters like the Japan Earthquake and Tsunami, Thailand Flooding too played their part but the global semiconductor industry survived these adverse conditions and grew modestly in single digit. The industry went through bad patch in 2009 due to the Global financial crisis where the YoY growth declined by 20% but it recovered in 2010 with a remarkable double digit more than 20-30% growth but due to the above mentioned adverse conditions growth was modest between 2-4% in 2011. But with the growing consumer demand for tablets, e-readers, personal computers like laptops, ultra books, smartphones, datacenters and cloud computing, etc the Global Semiconductor Industry is expected to reach approximately $412.8 billion in 2016 according to IHS iSuppli Global Manufacturing Market Tracker report. Global semiconductor revenue will reach $324.6 billion with 4.37% YoY growth in 2012 where as industry grew by only 1% in 2011 according to IHS.

Source: IHS iSuppli Research, April 2012

According to IDC, Worldwide semiconductor revenues increased more than 3.7% YoY to $301 billion in 2011, compared to more than 24% YoY growth to $282 billion in 2010. IDC expects 2012 semiconductor revenue growth to be in the 6-7% range fueled by accelerated growth in second half of 2012 when fab utilization rates rise and semiconductor cycle that started in mid 2011 will bottom out by second half. Gartner forecasts worldwide semiconductor revenue to total $316 billion in 2012, a 4% increase from 2011 level of $306.8 billion, up $5.4 billion, or 1.8% from 2010 level of $301.4 billion. Gartner is expecting a rebound starting in the second quarter of 2012, supported by inventory corrections, bottoming foundry utilization rates and global economy stabilizing. According to both IDC and Gartner, Intel is the market leader with close to $51 billion in revenues; Samsung is number 2 with $27 billion revenues (Gartner) and $29 billion revenues (IDC).According IDC Texas Instruments is third followed by Toshiba and Renesas Electronics but according to Gartner Toshiba is number three followed by Texas Instruments and Renesas. Also similar difference is there for number seven and eight positions according to IDC Hynix is seven and STMicro eight but Gartner classifies STMicro is seven and Hynix is eight.

Microprocessors performed well in 2011 after not doing so well in 2010 and are expected to continue to do well in 2012 with high average selling price and strong demand for Intel chips for use in Personal computers like notebooks & ultra books and servers. NAND flash memory revenues are expected to grow in 2012 just the way they grew in 2011 fueled by strong increase in mobile consumer devices and solid-state drives. DRAM pricing fell by 50% has affected the overall industry revenues in 2011due to falling ASPs and oversupply as it poorly performed where in the revenues fell by 25%. But DRAM will see slight recovery in 2012 as one of the major player Elpida filed for bankruptcy. Inventory is a major concern for the industry and according to IHS despite the semiconductor suppliers reducing their inventory by 7.5% over the last 6 months, total inventory remains at high levels both in terms of aggregate dollar value as well as in days of inventory but further reductions at least another 5%, expected through H1 2012, are necessary for chip makers to experience sustained demand and growth.

Gartner forecasts semiconductor revenue from media tablets will reach $9.5 billion as unit production is expected to increase by 78% YoY, semiconductor revenue from PCs will reach $57.8 billion as unit production expected to increase 4.7% and semiconductor revenue for mobile phones will reach $57.2 billion as production is expected to grow 6.7% in 2012. Consumer demand from Asia Pacific and Americas is expected to rise further but demand in Japan and Europe is expected to be seeing negative growth. The semiconductor industry is also seeing consolidation as larger players have significant cash reserves and looking to acquire smaller players as companies in the industry is positioning themselves for the next phase of growth with devices becoming more intelligent and needing support for high-level operating systems, connectivity, and application processing capabilities, according to IDC. A number of mergers and acquisitions came to fruition in 2011, most notably Qualcomm–Atheros, Texas Instruments–National Semiconductor, SMSC–Conexant, Broadcom–NetLogic, CSR–Zoran, and Microsemi–Zarlink and this trend is expected to continue in 2012 according to IDC. Ultimately the growth of the global semiconductor industry is dependent on macroeconomic environment stabilizing and improving with containment of European Debt crisis and growth returning back to emerging countries like India, China, etc that drive demand for PCs, tablets like iPads and e-readers, Smartphones like iPhones, no major natural disasters, and manufacturers of PCs like notebooks, ultra books, servers, mobile phones, etc launch new models and attract more consumers. Most of the research firms and semiconductor companies expect that growth will return by second half of 2012.

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