Applications market to be as big as internet in ten years

Operators are increasingly embracing it and are opening up their programming interfaces to external developers to boost innovation

Dubai Mobile applications are bringing the world to your fingertips. With the current explosion of new applications, it is expected that the market will be as big as the internet, peaking at ten million apps in 2020.

Nokia’s Ovi Store, Android Market, BlackBerry App World, Apple’s App Store and upcoming version from Microsoft give thousands of independent developers a relatively quick and easy route to consumers’ fingertips.

Market research firm Gartner estimates that this year, mobile users will pay more than $6.2 billion (Dh22.7 billion) to buy mobile applications for mobile phones this year despite the fact that 80 per cent of these will be free downloads.

“The app market in the Middle East is very strong and it is growing at a robust pace. Right now iPhone applications are much in demand, especially in the UAE, followed by Android. But Android will take time to catch up with iPhone applications,” Samer Al Sayah, ICT app developer for Flagship Projects, said.

He said right now there are around 50 mobile app developers in the UAE, focusing mainly on iPhone and iPad. About 60 per cent of the mobile applications in the Middle East are developed in the UAE.

As of October, Apple store has more than 300,000 apps, Android has more than 100,000 and Nokia’s Ovi has 28,000 applications as of November.

Key trend

“The key trend revolving around mobile phone is the data,” said Jamal Ahmad Abdullah Haji Bnari, etisalat engineer/IT development, central marketing. “In the West, Apple iTunes and Android are growing day by day.

“In other countries outside the West, it is not Apple, it is Microsoft, Android and Nokia Ovi which are doing brisk business.”

Today, he said everybody accesses the web through applications, but in Europe, people still use the web browser on the phone to surf. In the US and Middle East, people use applications to surf the web, and there is an app for everything and less and less people are going to URL to surf the internet.

Hadi Raad, Principal at Booz and Company, said competition is heating up in the applications space. Facebook, Twitter, and YouTube are drawing users by the tens of millions.

“Their presence and explosive growth are a result of the increasing sophistication of consumers and pose a threat to the ties between telecom operators and their customers,” said Raad.

“A similar competitive threat has emerged from the likes of Apple and Google, which are certain to continue to disintermediate telecom operators by offering applications directly to users through their own or third-party handsets.”

In the Mena region as well, customers have become far more sophisticated. Customers increasingly go online for communication, infotainment, and social media needs.

The Twitter community in the region grew by almost 300 per cent during the first six months of 2009 with 61 per cent of social networkers updating their Twitter status at least twice a day and 80 per cent of them accessing Twitter through a mobile device.

There are ten million active Facebook users in the region. In the UAE, Jordan, and Lebanon, more than 40 per cent of the on-line population uses Facebook.

As a result of the declining prices for bandwidth, which is expected to fall around 30 per cent annually, telecom operators are recognising the content and application space as a source of future revenue growth. Multimedia applications have been stoking demand for high bandwidth and likely will continue.

Applications downloaded in the region are expected to surge to 1.2 million by 2014 compared to 250,000 this year.

According to analyst Bhavya Khanna at ABI Research, mobile application downloads from iOS, the iPhone’s operating system, and Google’s Android could account for 78 per cent this year, of which iOS’s share is 52 per cent. But revenues from the application sales will continue to decline due to strong competition.

Customised offerings

“New ways for telecom operators to sustain their business is to grow in the applications and content space,” Raad said.

“Operators are increasingly embracing applications through their own offerings and by opening up their applications programming interfaces to external developers to boost innovation.” Haji Bnari of etisalat believes that data plans are becoming a commodity. “That is not the way you want to be; yes, your network is being commoditised and what you have to do is try to build services and market on top of it,” he added.

“Operators have three options to boost revenue from applications. First is for the operator to build own applications and sell, which is high risk. Second is tie up with third-party developers and co-brand the application, which is less risky.”

“Third is to let the apps providers build through your network. This can be done through pre-paid or post-paid cards.

“Operators are expected to tie up with app stores in the Gulf and customise the offerings. Etisalat is likely to form a tie-up next year.” Email, games and social networking dominate the application space.

“In the Middle East, with 55 per cent of the population under the age of 25 and 70 per cent of internet users on social networks, social networking sites are an important tool for content creators and broadcasters,” said Emmanuel Durou, senior engagement manager at Value Partners Dubai.

“It is a near-instantan-eous audience insight channel that opens up the opportunity to influence programme popularity through engaging with ‘opinion leaders’ and through maintaining compelling fan pages.”

The app market in the Middle East is very strong and it is growing at a robust pace. Right now iPhone applications are much in demand, especially in the UAE, followed by Android.”

© Gulf News 2010