Behind the App: How Developers Are Operating, Scaling and Measuring Success

With the introduction of smartphones and tablets in the 2000s, there has been a rapid expansion of the mobile application market worldwide. In July 2008, 25 years after the Aspen Conference where Steve Jobs first predicted the creation of a software distribution system, the first mobile application store was launched by Apple. Within a week, over 10 million downloads were made on the Apple Store. Within 60 days, the Apple Store had over 3,000 applications available in 62 countries. Three months later, the Android Market was launched and soon became the second major mobile application platform.

In March 2012, the Android Market merged with Google’s store and was renamed the Google Play Store. Google Play surpassed the Apple Store towards the end of 2014 as the biggest mobile app platform. This increased activity has resulted in sharp revenue growth. Global mobile app revenue is estimated to be over $40 billion for 2015, and it expected to exceed $100 billion by 2020. Even though Android has surpassed Apple iOS as the largest platform, iOS continues to generate more revenue.

This thriving mobile app industry has created a high demand for developers. In the US alone there are over 1 million software publishers, the mobile app developers are estimated to be around 680,000 in 2014. This industry continues to grow. The US Bureau of Labor Statistics estimates that software developer occupations, the larger umbrella that includes app developers, will increase by 17% from 2014 to 2024. Importantly, the majority of these developers work for companies that target the consumer market.

This fast-paced growth has resulted in a very diverse industry. While few app publishers are well established, the majority app publishers are startups. Furthermore, several large companies only develop one app and have over 50,000,000 downloads; other companies, have five or fewer employees and develop multiple apps that, collectively, reach the same size market. This diversity in the industry makes it difficult for companies to benchmark themselves against one another and little research has been published that provides meaningful information on performance and operations for the industry.

To address this issue, this report provides insights on app performance, user management, and business operations for consumer-facing app publishers. We examine four main categories: 1) app performance and user management; 2) revenue generation; 3) advertising; and, 4) operations expenses and developer staffing. To allow for comparison across firms, we assess performance by publisher size, app type, and market reach, among others. Our findings are based on our 2016 global survey of 338 developers and staff at firms who develop consumer-facing apps, as well as in-depth interviews with industry experts and findings in existing literature.

Published Fall 2016