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TheStreet Open House

Millions of Apps, But No One's Paying

NEW YORK ( TheStreet) -- A newly released survey predicts nearly 95% of all downloaded apps will be free in the next three to four years. That's not promising if you're an app developer, looking to make a big score off the next hot paid app.

According to research firm Gartner, 94.5% of all mobile applications will be downloaded for free by 2017. Experts predict that less than 1% of paid apps will be considered financial successes by their developers.

Analysts believe consumers are currently overloaded with millions of apps available for download on mobile app stores from Apple (AAPL - Get Report), Google (GOOG), Microsoft (MSFT - Get Report) and BlackBerry (BBRY - Get Report). Gartner says recommendations from friends, social media, ads and computer prediction engines will increasingly help consumers find appropriate applications.

The quality of modern free software versus paid-for software titles is not an issue. According to the experts "the bounty of good, free mobile apps has set high expectations for what should be paid for."

As fewer people try and buy new apps, fewer software creators will want to spend their time writing or updating mobile titles. Gartner Vice President Ken Dulaney says "our analysis shows that most mobile applications are not generating profits and that many mobile apps are not designed to generate revenue, but rather are used to build brand recognition and product awareness or are just for fun. Application designers who do not recognize this may find profits elusive."

Gartner found 90% of paid applications are downloaded less than 500 times per day, making less than $1,250 a day. That pay structure is only going to get worse in the future due to greater competition in the marketplace.

The San Francisco-based research firm also predicts the three major mobile platforms (Android, iOS and Windows) will gain "significant share" in the smartphone, tablet and PC space requiring businesses to support multiple platforms.

Written by Gary Krakow in New York.

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