Mobility

What app apocalypse? Apple's iOS economy to top $500 billion in 2019

Apps were supposed to have died, yet keep powering Apple's mobile ecosystem to the tune of half a trillion dollars next year.

Remember when apps died? Apparently someone forgot to tell Apple. By Asymco analyst Horace Dediu's reckoning, the iOS ecosystem generated some $380 billion in 2017 and should top half a trillion in revenue by 2019. Of course, not all of that is apps: A "mere" $35 billion or so each year, growing roughly $5 billion every year.

Pocket change.

Despite all the problems with apps (for both developers and consumers), they keep rising in importance. Why?

A box office smash

Apple's App Store, its biggest chunk of Services revenue, now generates more revenue than the entire film industry, as Dediu highlighted. That's right, however much you and millions of other people liked watching Coco, The Last Jedi, or other movies, you actually liked buying apps even more (probably at the theater during the boring bits with Luke and Rey on Ahch-To).

SEE: Mobile app development policy (Tech Pro Research)

Nor should we confine our count of app revenues to paid-for apps. Far more revenue is generated by apps that may be free (like Orbitz), but which sell services through the app. While it's hard to pin down a number for such economic activity, Dediu pins it at roughly $180 billion last year, with another $200 billion in hardware sales (which are, in turn, driven by the quality of the app experience).

To date, the heart of the app economy is Apple, which generates the most revenue (and definitely profit) from it. How much? Roughly $500 billion by 2019, according to Dediu.

And yet it wasn't supposed to be like this.

Whither the web?

Remember how developers were going to revolt en masse and build web apps? Intercom called for an end to app stores back in 2016, declaring that apps would become "systems" that deeply embed services, killing off the walled-garden app. It hasn't happened. Intercom more recently pointed to the web activity of Uber, Flipboard, and others that are increasingly building desktop web apps, as a sign that screens were the key, not mobile apps. Yet consumers continue to fixate on mobile apps, not those useful but not critical web apps.

Oh sure, apps have started to be more porous, and many popular apps (like Facebook) are essentially websites successfully masquerading as native apps. But there's a reason the app idea must be aped: It's what consumers want.

SEE: Apple's first employee: The remarkable odyssey of Bill Fernandez (PDF download) (TechRepublic cover story)

Not always, of course. If I'm a casual consumer of a certain hotel chain, for example, that travel company needs to ensure I can get a high-quality mobile web experience. For my more committed customers, however, I'm going to want to give them mobile room keys, quick access to their frequent traveler account, etc. in the app. It all depends on what the customer wants, and where.

Apps remain a key requirement for consumers, one that generates roughly $100 million every day in Apple App Store revenues. Let's therefore stop pretending that the app apocalypse is just around the corner. It's not. Apps are here to stay.

Also see

Apple iPhone X Apps
Image: CNET

About Matt Asay

Matt Asay is a veteran technology columnist who has written for CNET, ReadWrite, and other tech media. Asay has also held a variety of executive roles with leading mobile and big data software companies.

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