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Prompted by Nate’s comment, here are a couple more looks at application trends on the app Store. First, if you have a look at the distribution of applications by price over time, you can see the rise of $.99 and $1.99 apps, along with the corresponding fall in free applications. Applications priced $4.99-$9.99 also see a decline, while most other prices are essentially stable.
Interestingly, with just a couple of exceptions, the distribution of categories appears to be stabilizing a bit, at least for the top genres. Games represent about a quarter of the applications in the store. The big mover appears to be medical, which has grown to more than 5% of the apps in the store.
And in a final note- the growth of the apps in the store continues to be steep- closing on 12,000 applications…
If you’re looking for market feedback on the value of applications, here it is. Using updated data to take a look a pricing trends confirms what I think everyone already knows. Each month, the average price of apps on the store just declines. For example, have a look at the average price of applications (excluding medical applications, whose high prices skew the results).
An average application price that was once nearly $4 has fallen to nearly $2.25. It’s too early to tell, but it certainly doesn’t look like we’ve hit bottom yet, either.
If you look at games, the downward trend is much more dramatic, but prices appear to have stabilized at just under 2 bucks an application. This, of course, begs the question- games are the most popular application in the store, is this because they’re cheap? Or is this really the best we can hope for- that the most popular category of applications on the store is perceived as being worth about $1.50 an application?
Health and Fitness is one of the few categories that appears to be reversing this trend. After an initial price drop, this category has seen average prices rise nearly every month, now approaching $3 an application. And it does make sense- after all health and fitness applications are likely to impact your life much more significantly than a game.
Why the downward trend overall? There are a lot of factors.
But the real problem here isn’t that customers like cheap applications. It’s that the way the store is structured today is creating a vicious circle of downward spiraling prices. As pricing pressure forces applications to be less expensive, developers need to respond by reducing their investment in the applications (to make them profitable). This in turn reduces the value of the applications, continuing to increase price pressure. Without some kind of change, I’m not sure where the pricing stops.
A couple of suggestions
Or maybe, this is by design. After all, Apple stands to make 30% of the total app sales, and they don’t need to applications to be expensive. In fact, when you consider that they make money on the app transaction, but also that each new application adds value to the iPhone platform, more apps (even if they’re cheap) is probably better for Apple.
Taking a closer look at the growth rate of various categories confirms what everyone already knows- games are the high growth area of the App Store. There are a couple of interesting things that can be learned from the category trends, however.
The below is a look at the most common application categories and their growth rate.
1) Although the Utilities category was initially a high growth category, it’s growth is actually relatively flat. Entertainment applications have surpassed Utilities as the second most common type of application on the store.
2) The Education category is growing incredibly rapidly, taking fourth place in November. If it continues to grow at its current rate, it will soon be the third most common category of application in the store.
The below is a look at the least common categories and their growth rates. Healthcare & Fitness is the big winner here…
If you take a look at the growth rates of the App Store by price, something that you may have already intuitively known starts to become clear. $.99 has become the default price of applications on the store. In face, more than 1 in 3 of the applications on the store now cost $.99.
And the trend looks to be accelerating. The graph below illustrates the growth of various price points, and $.99 is outpacing every other price, including free. Seems everyone thinks they can make a buck on the App Store (well, 70 cents).
Of course, one of the very interesting things about settling on $.99 is the fact that this is also the base unit of measure in the rest of iTunes, where songs cost $.99. Are we trending toward a store that sells primarily applications in the same way it sells songs? And if so, what does that imply about how applications will look, how complex they will be, and their longevity? After all, the music business is largely a hits business (at least it used to be, now who knows what kind of business it is). And I guess the app business is likely to look the same…
For those waiting for my official acknowledgement, the App Store now has more than 10,000 applications available. Congrats!
I’ve been using Outbrain on my blog for a few weeks and I’ve been generally very happy with it. It is well integrated, visually attractive, and provides a real value in the ability to see reader’s ratings of my posts. It also usually does a pretty good job at making recommendations, but as I was replying to a comment on a post about the iPhone, I noticed the following recommendations.
WTF? Real Muscle Online? I’m not sure I get how that is likely to apply...
In my last post, I reviewed a bunch of data about the applications on the App Store, and that pointed to more than 9,000 applications on the store. Now, word is out that the App Store has crossed 10,000 applications. So, I did a quick refresh of my data, and looks to me like the store is still a bit short of 10,000 with 9,774 applications actually active in the store.
My utility literally crawls the iTunes store to find out the applications, so I have faith that the data I have is accurate. So I’m not sure what accounts for the discrepancy in the numbers. Could be applications that were approved and then taken down. Could be applications that were taken down voluntarily by the application developers. Either way, looks to me like we’re still a couple days away from having 10,000 active applications.
Edit: Note that the folks at AppSherpa offer the following clarifying note, confirming my suspicion:
What these sites are not accounting for is that many applications, after being listed on the iTunes store, have either been pulled by Apple, or the developer. So, while it is true that 10,000 apps have been released, it is not true that 10,000 Apps currently available to download.
Well played, AppSherpa.
