The Size of the Mobile Application Development Market in Australia and Beyond

Many Australians enjoy getting in some quality time in the great outdoors. Just as many enjoy chatting with mates, hanging out, and watching TV. Reflecting these hobbies and lifestyles are the apps that Australians use. It’s little wonder then that the most popular apps here are WikiCamps Australia, Tinder, and Netflix.

The natural landscape in Australia is a mecca for daring adventurers and the technological scene is a playground for savvy entrepreneurs.

Worldwide, internet penetration has reached 53 per cent of the world's population. The rate for Australia, however, is 88 per cent, making the nation among the 20 most wired countries in the world. According to a 2018 Global Digital Report, the number of active mobile users here is just over 18 million, nearly 74 percent of the country's population.

One per cent of Australian workers are involved in the mobile app market, engaged in all stages from app development to support. Our MadAppGang team has been among these workers for more than five years. With professional expertise and a great passion for building helpful and high-quality products, MadAppGang has been providing mobile application development services to the Australian market since 2013.

The mobile app industry is a complex ecosystem, complete with its own unique rules and laws. Knowing how to navigate and be part of this ecosystem is an indispensable attribute for any modern-day business.

MadAppGang is a customer-centric company, and in addition to putting the interests of users of mobile devices first, we also consider it our duty to help Australian entrepreneurs readily navigate the mobile app market. We want to share our industry knowledge, and give you an idea of the market. It doesn’t matter if you want to build an app for Australia’s or for any other markets, the key elements of the mobile app market remain the same regardless of location.

We know how hard it can be to grasp all the aspects and understand all the features of the mobile app market. To help you see a clearer picture, we did research and gathered all the main findings in this article. Let’s take a closer look at them.

For ten years now the world has been divided between Android and iOS. The two most popular app stores fully own the market, leaving only a small part of it to those who dare to compete with the giants. Google Play and the Apple App Store are, arguably, the two primary forces driving the market, therefore knowing and understanding them is a must for every entrepreneur.

Mobile App Revenue and Downloads

Global mobile app revenue distribution between The Apple App Store and Google Play (Q3 2017 to Q3 2018). Source Sensortower.

Back in 2008, when the Apple App Store had just started, the number of apps available on the marketplace was only five thousand. As of 2018, this number grew to over two million. On Google Play, the number of available apps is a bit over two million.

As of 2018’s third quarter, the Apple App Store made $12 billion, this is indicative of its year-over-year growth rate of 23 per cent, quite a leap compared to 2017’s figures. Google Play, on the other hand, earned over $6 billion worldwide in 2018 (excluding the Chinese market) and had a 21 per cent increase in comparison to the previous year.

On the App Store, the number of new app downloads reached over seven billion in the third quarter of 2018. This is much lower than Google Play’s 20 billion app downloads.

Global mobile app sales distribution between The Apple App Store and Google Play (Q3 2017 to Q3 2018). Source Sensortower.

Both stores have shown growth of their revenue and app downloads when compared to 2017, but almost two-thirds of mobile app revenue was generated by Apple’s App Store. Although, it’s worth considering the fact that the fast spread of lower-cost Android devices across the globe affects both the number of app downloads and Google Play’s annual revenue.

With the smartphone shipments decline of 6 per cent and the US crusade on Huawei, the smartphone market experienced rather a difficult year.

According to the International Data Corporation’s (IDC) Worldwide Quarterly Mobile Phone Tracker, smartphone vendors shipped over 355 million units which is 22 million less than in the previous year. But there is always a silver lining. In 2019, the IDC predicts overall market growth because of the rise of the premium segment, the continuous process of 5G development and the introduction of flexible screens.

The top five smartphone vendors now cover 63 per cent of the market, leaving the remaining 47 per cent to other 600 manufacturers.

1. Samsung — 19%
2. Huawei — 14%
3. Apple — 12%
4. Xiaomi — 9%
5. OPPO — 9%
6. Vivo — 9%
7. Motorola — 3%
8. LG — 3%
9. HMD — 1%
10. Tecno — 1%
11. Others — 21%

The absolute winner on the Android market is Samsung. Even the decline of smartphone shipments in 2018 due to the weak sales of its flagship product, the Galaxy S9 series smartphones didn’t prevent Samsung from becoming a leader again. In Australia, the brand is ranked as the second favourite among consumers while the first place is taken by Apple's iPhone. According to Statcounter, Apple owns 66.29 per cent of Australia’s market share, leaving its competitors far behind.

Huawei is the fastest growing smartphone manufacturer among Chinese brands and its expansion in Europe is gaining momentum. Despite its growing global popularity, Huawei can’t compete with Apple and Samsung on the Australian mark

There is no such thing as “too much, too many” when it comes to the business of apps. According to Statista, there are 3.6 million apps available in Google Play and 2.2 million in Apple’s App Store.

The two leading mobile apps distributors are not the only ones out there, and besides Apple and Google, there are over 300 app stores on the market. Some of them have a quite narrow focus while others lack apps in a specific category.

There are app stores that only cater to certain countries and aren’t available elsewhere. Some app stores are platform-specific, meaning they only support devices running on one particular platform.

Here is a list of the most popular app stores worldwide:

Alternative app stores often have a very narrow specialization, whether it's location, platform, or the main categories a store is focused on. Neither of these alternatives can fully replace the two leading stores, but it’s important to know what the market has to offer.

We know that choosing the right app store can be challenging, especially when it comes to considering alternatives to both Google Play and Apple’s App Store. But before giving preference to something alternative and risky, take a closer look at the classics. The two leaders are the right place to start your business given their stability on the market and the steady growth of users both are seeing.

In 2019, the worldwide app store consumer spend is expected to grow five times faster than the overall global economy. As before, the Games category will be the main enhancer of the mobile app market growth, and mobile gaming will remain the fastest growing form of gaming.

Another type of mobile apps that is currently increasing its presence on the market is enterprise mobile apps. In a nutshell, enterprise apps are normal mobile apps used by enterprise companies in their daily work. Well-known companies such as Adobe Systems, IBM, Apple Inc., MobileIron Inc., and Microsoft Corporation are some of the major players in the enterprise mobile app development market.

Other popular app categories in Google Play according to Statista are Tools, Entertainment, Communication, and Photography. In the Apple App Store, the most popular app categories are Business, Education, Lifestyle and Entertainment.

If you're wondering which applications exactly are getting the most downloads on the App Store and Google Play, here they are:

Top Grossing Non-Game Apps for Q3 2018 - iOS and Android

1. Netflix, Netflix, Inc.
2. Tinder, Tinder Inc.
3. Tencent Video, Tencent
4. iQIYI, QIYI
5. Pandora, Pandora
6. Youtube, Google LLC
7. Kwai, Kwai
8. Line, Naver
9. Line Manga, Naver
10. Youku, Alibaba Group

Top Downloaded Non-Game Apps for Q3 2018 - iOS and Android

1. WhatsApp, Facebook
2. Facebook Messenger, Facebook
3. Facebook, Facebook
4. TikTok, Bytedance
5. Instagram, Facebook
6. SHAREit, SHAREit
7. UC Browser, Alibaba Group
8. Hotstar, Star India
9. Vigo Video, Bytedance
10. Snapchat, Snap

Well before you build your app, you have to decide on what model of monetization you are going to implement. It should be thoroughly designed and take into account the purpose of the future app.

A sustainable flow of income is achievable with the following app monetization models.

Monetization Through Advertising

Examples: Instagram, Duolingo, Spotify.

This is the most popular monetization model, but it’s not always the most successful. Monetization through advertising allows users to access app content for free and revenue is earned via ads displayed to users within the app. The higher the number of downloads, the greater the revenue. Choosing this model of monetization means you have to be sure that the potential and current advertisements are targeted and relevant to your users.

Depending on the user base and the type of an app, there are several ad formats:

• Banners are the most frequently used form of in-app advertisements. If not designed well, they can come across as spam from a user perspective. Usually, banners are located at the top or bottom of the screen.
• Interstitials are a type of advertising that displays an ad which fills the whole application window and hides its content. Users can either close the ad and return to the app or initiate a click-through. These ads attract users’ attention better than banners, but their timing and frequency should be carefully calculated because if they occur too often they can irritate users.
• Native Advertising is the most elegant format of advertisement. Native ads harmoniously fit into an app’s interface without affecting user experience. They appear to be a part of an app’s content. Usually, native advertising is labelled “recommended for you”, “sponsored” and other similar notes indicating that this specific piece of content is an advertisement.
• Capture forms are forms designed to collect user data. Most often this is done by making users subscribe to newsletters. The collected information usually includes the user’s email address but in some cases the phone number and postal address can also be requested. The data can then be used for further marketing campaigns.

Freemium

Examples: DropBox, Basecamp, Evernote, Skype.

A combination of “free” and “premium”, this monetization model offers two versions of the same application — a free version that supports the basic functionality and a premium version that gives access to additional features. Freemium model attracts users who aren’t initially ready to pay and entices them to pay to enhance their experience. Regardless of the users’ purchasing decisions, an app that uses a freemium model should provide an equally engaging experience to everyone. However, deciding how much free content to offer can be challenging. There is always a risk that providers give too much or too little.

In-App Purchases

Examples: Candy Crush, Tapped Out, Real Racing 3.

Some apps on the market are free for download but come with the ability to make in-app purchases. It means that users can purchase items within the app in order to complete a task faster,more efficiently, or to head over to the next level. In-app purchases are rapidly taking over other monetization models but are mostly used in mobile gaming apps. Some apps offer an option of “hiding” advertising in their apps in case of in-app purchases. Implementing this monetization model will allow you to keep your application free so it could attract more users and make it possible for you to earn revenue.

There are two types of in-app purchases:

• Consumable. One-time use purchases are considered consumable. Game hints, game currencies, extra points or health, all of that a user can buy and use just once.
• Non-consumable. These in-app purchases last forever, can be re-downloaded at any time, and transferred to other devices. Examples of non-consumable purchases include level or full game unlocks, ad removal, and unlimited hints.

Subscription

Examples: Forbes, Netflix, Spotify, Sweat: Kayla Itsines Fitness.

This model is similar to Freemium but the difference is that it focuses on giving access to content rather than certain features. Much online commerce is moving toward the subscription model and this has resulted in the growing popularity of this monetization strategy. In fact, most online publications and streaming services use this monetization model. Users download the app for free and get access to limited content on the terms of the free trial. To get full access to the content, users need to pay the subscription fee. The advantage of this subscription model is in the long-term revenue flow it provides. But just like the freemium model, it can be difficult to define how much free content will be accessible to users.

Pay Per Download

Examples: Scanner Pro, Dalgona, Threema, Afterlight 2.

Paid apps are rapidly losing their popularity among users. This monetization model is quite simple — to access an app’s full functionality users need to make just one payment. In app stores, an application utilising the pay-per-download model introduces users to its functions and features through screenshots, descriptions, and a video. Based on these, users decide whether or not to purchase the app. It’s quite often difficult, if not impossible, to convince potential buyers using this means. After all, app stores are filled with free apps and it’s hard to convince a user to pay for something they haven’t even tried. To compete with literally hundreds of free competitors and to make this monetization model work, your app should be exclusive, unique and exceptionally usable.

Behind every great app is the work of people. Mobile app development takes time and a lot of work.

Today, about 19 million people are involved in software development and half of them are developing mobile apps. Developers are located all over the globe. Asia leads with 33 per cent of all software developers worldwide. Europe and North America have equal shares with 30 per cent each.

Worldwide Percentage of Mobile Developers Prioritizing Each Platform

Source Developer Economics

Each platform has its adherents. Globally, the number of developers who give their preference to Android is higher than those who develop for iOS. Interestingly, developers in Australia and Western Europe are equally supportive of both competing platforms.

How Much Mobile App Developers Charge Per Hour

Needless to say, the hourly rate developers charge largely depends on the country they live in.

Rates for iOS and Android development are nearly the same. Among the seven regions, mobile app developers in North America charge the most with an average hourly rate of AUD $200. On the cheapest end of the scale is India, the average rate there is AUD $15-$100.

Source PayScale

Three Ways to Build a Mobile Development Team

The future success or failure of an app directly depends on the team developing it.

There are three ways to hire developers to build an app for you:

• Onsite team The first option is to hire developers and make them your staff members. In this case, all team members will be available during their working hours and you have full control over the process. The key benefits of an onsite team:
• Effective communication
• The availability of on-hand information
• Face-to-face communication
• Time-effectiveness
• Offshore team. This popular model, also known as outsourcing, is based on handing the development process over to an external vendor. Usually, there is no face-to-face communication and quite often there is a difference in time zones between the client and the team. The key benefits of outsourcing:
• Low costs
• Easy recruiting
• Easy team scaling
• Predefined budget
• Shared risk management
• Hybrid team. This model refers to a cooperative work between both onsite and offshore team members. Typically, tasks are distributed between onsite and offshore teams, and both sides are equally involved in the development process. Hybrid is a reliable and well-working model and it’s quite popular among entrepreneurs. The key benefits of a hybrid team:
• Best-resources
• Cost-effectiveness
• Direct communication
• Risks mitigation

The short answer is yes, it is. On one hand, the global mobile app industry is complex, highly competitive, and takes a lot of effort and resources to succeed within. But on the other hand, mobile app fatigue is far from coming. Global smartphone penetration and users’ readiness to fully immerse in modern technologies only prove that.

Mobile continues to fuel corporate priorities and shape consumers' mindset. According to AppAnnie, app store consumer spend will exceed $122 billion and there is always a chance to get a nice slice of that cake. The mobile app market thrives and its growth is not yet completed.

The mobile app market is tough and tricky and the way to success won’t be easy. It takes a team of professionals, a firm strategy, dedication, and a great amount of perseverance. Yes, there will be risks and your monetization journey might be longer than you expected. Just remember that all the success is the result of tenacity and collaborative effort.

Build your dream team, study your target audience and come up with the strategy that will allow you to bring your idea to life. The mobile app market is complicated, but it’s definitely worth a try.

22 February 2019