Apps industry has Apple to thank

For an industry that didn’t even exist just three years ago, the mobile apps market is experiencing phenomenal growth and success – and it’s all thanks to Apple.

After the hype around last week’s launch of the iPad, figures this week reveal that roughly 3 billion apps have been downloaded for Apple’s iPhone, iPod Touch and iPad.

The app economy is growing rapidly and could top $20 billion (£13bn) in just a couple of years.

Roughly 80 percent of all apps are free, those that aren’t are usually under £1.

So how did a market, which focuses on free and almost-free apps, grow into an industry with annual revenues of $6 billion (£3.9bn)?

Apple has really changed the game in many ways – it has made every day people apart of the development process by making it simple to get apps to the App Store.

And once it was easier, faster and more lucrative to develop apps and sell them, more developers began to create them.

But making money from apps is another story.

Charles Golvin, a senior analyst at Forrester Research, says developers who sell millions of their apps — even for a tiny price — can turn a profit.

And the guys in the garage who are giving their app away free may be hoping to eventually sell a premium version — or sell something that goes with it.

But developers typically get around 70 cents (US) of every dollar spent to download their app. And then there’s a separate stream of revenue from advertising.

Developers get most of the advertising dollars, but companies that that serve up ads make money as well.

This is where iAds seeks to make a difference – by offering advertisers a 60/40% split of ad revenues.

But will it encourage more premium apps and will we, the consumers, end up paying more for those tiny, reasonably priced luxuries we so love in app form?