Click to Print

3 Ways to Outfox the Apps Craze

August 16, 2012

Even if you took the market value of all of the goods and services that are produced annually across Aruba, Fiji, Barbados, Grenada and Greenland, you’d still fall short of the global revenues that were generated last year through mobile apps: $15.1 billion.

For code-hungry developers, there seems to be no shortage of appetite for pint-sized digital portals on smartphones and tablets. Around 3 billion apps have been downloaded from Research in Motion’s App World, with an additional 20 billion via Google Play and a full 30 billion through Apple’s App Store.

But this sector’s explosive growth has some questioning whether it might be ready to bust. In some ways, it’s already tearing at the seams.

Last year, a photo-sharing app called Color raised more than $40 million from investors before users started downloading it. Yet in a cautionary note to both developers and venture capitalists eyeing this space, Color was overhauled after failing to entice a large enough following.

While many app-development costs have been falling in recent years, few programs actually attract enough paid users to turn a profit. Nearly 60 percent of developers in a May survey from the marketing and strategy consultancy App Promo, said the income earned from their most successful apps was not enough to break even with its creation costs. More than three quarters also said their top app fell short of being financially successful enough to prop up a standalone venture.

Related: Andrew Rasiej on the Next Big Wave in Tech -- And How Young Treps Can Surf It

"App developers aren't typically very good at thinking commercially," says David Ashford, an e-business consultant in the United Arab Emirates who used to work for an app-development fund. "App developers need to innovate and think about what people want to consume rather than what they want to develop," he adds.

So what's a burgeoning app maker to do? Here are three secrets for extracting the highest profit potential from an increasingly crowded marketplace:

How have you dealt with the rising competition in the apps world? Let us know in the comments section below.