The smartphone manufacturers need a compelling fleet of apps to sell their devices, but for developers success is far from guaranteed

This article is more than 7 years old

This article is more than 7 years old

Apple's App Store celebrated its fifth birthday this week with some impressive milestones: 50bn app downloads and more than £6.6bn paid out to app developers so far.

Alongside Google's Android app store – 48bn downloads to date – and those of rivals like Windows Phone and BlackBerry, Apple has built a thriving economy for smartphone and tablet apps since its store launched in 2008.

Industry analyst ABI Research estimates that the mobile apps market will be worth £17.8bn globally this year, with iOS generating more than two thirds of those revenues, even though Android currently accounts for 75% of new smartphone sales.

The biggest hits

Apps have fuelled digital disruption in a range of industries, from entertainment services like BBC iPlayer, Spotify and Netflix to online retailers like eBay, which expects to process $20bn of mobile sales in 2013.

Apps have been key to the rise of social networking services like Facebook and Twitter, too. More than 75% of Facebook's 1.1bn active users are accessing it from mobile devices, while 60% of Twitter's 140m active users do likewise.

Games in particular have proved a lucrative apps market. Developers GungHo Online and Supercell respectively generated $303m and $179m of revenues from a handful of games in the first quarter of 2013, for example.

Nick D'Aloisio, founder of the Summly app which he sold to Yahoo for £18m in March. Photograph: Nadine Rupp/Getty Images

Startups with popular or innovative apps have also become acquisition targets, from Facebook's $1bn purchase of photo-sharing app Instagram in 2012 to Yahoo's £18m acquisition of Summly in March, four months after it was launched by 17-year-old Brit Nick D'Aloisio.

Winners - and zombie losers

The real winners from the apps era have been smartphone and tablet makers, with sales of more than 900m Android devices and 600m iOS devices since 2007.

"You've got to have a compelling proposition around apps, and a clear app strategy if you want to sell phones today," says Andrew Fisher, executive chairman of Shazam, which has 70m active users of its apps.

Plenty of winners, but the app stores have their losers too. Mobile analytics firm Adeven claimed earlier this week that two thirds of iOS apps may be "zombies" that never get downloaded.

Apple disputes that research, pointing to its CEO Tim Cook's claim in June that 93% of the 900k apps in Apple's store had been downloaded in the previous month.

What's clear is that the store can be a ferociously tough environment even for high-quality apps. British developer Agant recently closed down, despite having made critically-acclaimed apps for brands like QI, Great British Bake Off, Arsenal FC and Terry Pratchett's Discworld.

Terry Pratchett's Discworld app was critically acclaimed, yet developer Agant was recently forced to close. Photograph: Guardian

"Unfortunately, the iOS App Store's set-up just does not seem to support the discovery, trialling and long-term life of these kinds of high-value apps, making it difficult to justify the risk of their development," wrote managing director Dave Addey in a blog post.

That tale is reflected even by successful firms, such as Swedish children's apps developer Toca Boca, whose apps have been downloaded 40m times.

"We've been profitable for a while, but I think that's very rare, unfortunately, at least from what I hear from industry colleagues," says chief executive Bjorn Jeffery.

"There is a very small head and a very, very long tail. And the angle at which the head drops to the tail is very steep. You're either doing pretty good, or not doing well at all."

The meritocracy of apps

The flow of companies hoping to fall into the former category isn't slowing down, though, in part because startups see the App Store as a meritocratic business environment.

"Apple are very even-handed in the way they treat people, in terms of not favouring the biggest companies over smaller ones," says Matthew Wiggins, who sold his first mobile games startup to publisher Zynga in 2011, and is now launching another, JiggeryPokery.

"As a small startup without millions of quid in investment or an established presence, that gives you an extremely level playing field in which to operate."