Building the Apps Economy

Market Metrics and Growth Trends

• Mobile app usage time in the U.S. surpassed web browsing time for the first time in December 2011, a trend that has accelerated since.
• In 2012, the app economy saw 81 billion downloads, compared to 16 billion cumulative downloads on iTunes over an eight-year period.
• App economy jobs in the U.S. grew by 43% between March 2013 and April 2012, significantly outpacing the 8% growth in general software developer jobs.
• Approximately 466,000 to 519,000 app economy jobs existed in the U.S. by late 2012, with California leading in volume and Washington leading on a per-worker basis.
• The majority of these jobs are concentrated within large enterprises (e.g., banks, military, pharmaceuticals) rather than small startups, as corporations use apps for internal productivity and customer engagement.

Monetization and Business Model Evolution

• The industry has shifted from a "paid vs. free" model to a sophisticated "freemium" ecosystem involving in-app purchases, ads, and microtransactions.
• Gaming represents approximately 40% of app monetization; Angry Birds achieved sales volume comparable to Super Mario Bros. (225 million units) in just five years versus 25 years.
• Entertainment value per hour is significantly higher in mobile games compared to traditional media: ~$1 for Angry Birds vs. ~$6.50 for movies or ~$2 for console games.
• The "app as a service" model is emerging, with over 100 marketing and monetization service companies evaluated in 2012 alone, driving a trend toward industry consolidation.
• Future monetization will increasingly rely on location-based data to drive brick-and-mortar foot traffic, transforming mobile ads into measurable lead generators for physical retail.

Data, Privacy, and Regulation

• The app economy generates massive data volumes; 81 billion downloads at 10MB each implies 27 petabytes of traffic, dwarfing the written history of mankind (50 petabytes).
• Regulatory frameworks, particularly in the U.S. and Europe, lag behind technology, creating tension between economic growth and privacy protection.
• European regulators prioritize privacy as a human right, potentially stifling economic growth, whereas the U.S. faces a balancing act between innovation and consumer protection.
• Healthcare app regulation is currently hindered by the FDA's lack of a specific rubric for mobile software, as they traditionally focus on clinical outcomes rather than productivity or data metrics.
• Privacy concerns are heightened by the shift from "search" to "location-based" data collection, where companies can track real-time movement, purchase habits, and social interactions.

Sector-Specific Innovations

• Healthcare: Apps are being developed for remote monitoring, including ear exams, diabetes management, and heart rhythm tracking, with future potential for terahertz scanners to detect carcinogens.
• Education: Platforms like Khan Academy are expanding access to consistent education, while gamified drug adherence apps (e.g., Mango Health) are being tested to improve patient compliance.
• Transportation: Crowdsourced navigation (e.g., Waze) uses 45 million active users to provide real-time traffic data, saving an estimated 2.7 billion hours annually for its user base.
• Entertainment & Retail: Brands like Disney are integrating mobile technology (e.g., wearable bands) to manage park congestion and redirect foot traffic in real time.

Future Outlook and Challenges

• Industry leaders argue that "apps" may become an obsolete term as computing evolves into wearable devices (e.g., Google Glass) and augmented reality interfaces.
• Discovery remains a critical bottleneck; with 750,000+ apps, identifying valuable services is becoming increasingly difficult for users.
• The economy of the app sector is likely growing faster than official GDP figures suggest, as it captures time savings and data efficiency not currently measured in traditional economic statistics.
• Consolidation is expected in monetization SDKs due to memory constraints (the "50MB limit"), forcing developers to choose between 5-6 service providers.
• Augmented reality is identified as the next major paradigm shift, eventually overlaying digital information onto the physical world via transparent displays.