Make an app – why? The 74 billion dollar answer

You can see my first post, in this 2 parter, which focused on the historical evidence of the value and opportunity of the app economy, here.

In this post, we look to the future and what the app economy has to offer.

Gartner are predicting that global app revenues from the app stores, will increase to $24.5billion in 2013 (this includes advertising revenues).  That’s a huge number, for an industry that came into existence as recently as 2008.  Nought to $24.5billion in 5 years, so what’s to come?

Well, the mega growth is predicted to continue, with Gartner predicting these numbers will triple by 2016 with app developers earning $74billion in revenues that year.

If we assume this growth is reasonably even, say $40billion in 2014 and $55billion in 2015 – that means that in the next 3 years, the owners of apps in the app stores will earn a combined $169billion – that’s a fist full of dollars!

And these are revenue numbers, they don’t speak of what the underlying businesses that own these apps may be worth.  Businesses are usually bought on a multiple of revenue, whilst these multiples can vary hugely – from about 3 or 4 times for private businesses, to the exceptional Amazon which is currently estimated to be over 300* in 2013.  Technology companies tend to enjoy higher multiples than more traditional businesses that don’t have the chance for exponential growth – a retail store for example (i.e Macy’s is currently valued at under 1*) – so let’s use a still conservative 10*.

Valuing the app economy using this 10 times multiple, means that the businesses directly earning money from it (ignoring the valuations of the app facilitators Apple, Google, Samsung – should I say Microsoft? – probably shouldn’t say Blackberry!) will have a combined value of $740billion in 2016.

That would place it in 24th place in a list of the world’s leading economies, just below Thailand, but above Holland, Pakistan and South Africa and 157 other countries!

So, should competing within the app stores still seem too hard?

No – but, the competition does mean you need to know what you’re doing, and make great apps in order to be successful.

The good news is – we’ve written a Course that will set you on the runway to achieving this. There’s no risk, with you Starting on a Free Trial.

Nicholas Wright wrote on

Nicholas is a co-founder and CEO of AppInstruct. Nic is actively involved in the start-up space, mentoring other founders with mobile, fundraising and legal advice. Nic's favorite app is WhatsApp, which allows him to remain in contact with family in America and England.