Although growth of mobile apps shows no signs of abating, revenue generated through app development is expected to increase at a slower rate as smartphone penetration begins to reach saturation. Nonetheless, industry revenue will outpace the overall economy as smartphone adoption and mobile internet connectivity continue to rise. Over the five years to 2023, revenue is expected to grow at an annualized rate of 6.2%, to reach a total of $3.3 billion. Increasing smartphone penetration and the convenience and entertainment that apps offer will encourage people to use smartphone apps, and increase demand for industry services.
Number of Mobile Internet ConnectionsThe number of mobile internet connections represents the total number of consumers who own a broadband internet-capable device, such as a smartphone. Consequently, as the number of mobile internet connections rises, so does the number of smartphones. In 2018, the number of mobile internet connections is expected to increase, representing a potential opportunity for the industry.
Percentage of Services Conducted OnlineThe percentage of services conducted online represents consumers' and businesses' increasing use of the internet for services they used to pay for at physical locations. As the percentage of services conducted online increases, so does the percentage of services offered through smartphone applications. The percentage of services conducted online is expected to increase in 2018.
External CompetitionAlthough Apple's App Store and the Google Play Store have nearly 5 million apps between them, only a handful are used on a daily or even weekly basis. As a result, it is very difficult for an app to go mainstream. This is a threat to the industry as potential customers may decide not to use any one app at all.
Corporate ProfitFor many small companies, investing in application development is a capital expense. As a result, corporate profit levels serve as an important indication of investment in app development. As corporate profit increases, companies have more money to invest in development. Corporate profit is expected to increase in 2018.