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TheStreet Open House

Apple Paves Way for Burgeoning App Economy

Stocks in this article: AAPL GOOG AMZN HPQ

NEW YORK ( TheStreet) -- The "app economy" continues to grow, with tablet apps expected to surpass smartphone apps by 2018.

According to ABI Research, apps will account for $25 billion in revenue this year, with $16.4 billion coming from smartphones and $8.8 billion in tablets.

Apple (AAPL - Get Report) continues to be the dominate leader in this space, accounting for 65% of the revenue. Google (GOOG) accounts for 27% of the revenue, with the remaining 8% coming from other platforms, including Microsoft (MSFT) Windows and BlackBerry (BBRY).

As tablet sales continue to grow, the number of tablet apps will continue to increase, and eventually reach smartphone app sales by 2017, surpassing them in 2018. ABI Research estimates by then the combined revenue between tablet and smartphone apps will be $92 billion.

"The dynamic is quite straightforward," said senior analyst Aapo Markkanen in the release. "The larger screen makes apps and content look and feel better, so there are more lucrative opportunities."

The thinking behind this is that low-cost tablets, such as the iPad mini, Nexus 7, and Amazon (AMZN - Get Report) Kindle Fire HD will continue to be more transformative, and bring computing power to the entire world.

Perhaps that's why Apple CEO Tim Cook has stressed that the iPad is such an important business to Apple. Speaking at a recent technology conference, Cook said the opportunity for the iPad is huge, especially given the size of the PC market. He noted there were more iPads sold last year than PCs sold by HP (HPQ - Get Report), and that the tablet market is still in the early innings.

"The tablet market last year, the projections I've seen would indicate there was about 120 million tablets sold last year," Cook said. "The projection is that this is going to triple -- triple -- in four years. And so when you think about that -- I think the actual number is 375 million."

Markkanen noted that the allure of tablets is not only do they bring computing power across the world helping to bring companies significant revenue, but the social benefits are far reaching as well.

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