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					PRESS RELEASE

“Everything for free” culture is spreading

More than 80 percent of the downloaded apps are free, while
about 75 percent of apps cost money. But sales are expected to
rise since the number of smartphone users will grow strongly
particularly in view of the iPad launch in Europe on May 28th.

Bonn, May 27, 2010 – Many apps that cost money are not downloaded very
often. This indicates that the “everything for free” culture of the stationary internet
is spreading to the emerging mobile internet market. The global strategy and
marketing consultancy Simon-Kucher & Partners asked 200 smartphone users
with an interest in smartphone apps about their visit and purchase habits. Most of
the respondents do not leave the app stores empty-handed and download
something – but mostly if it’s for free.


“That might sound disappointing for app providers, but sales are expected to rise
since the number of smartphone users will grow strongly particularly in view of
the iPad launch in Europe”, says Annette Ehrhardt, study author and media
industry expert. How this emerging market will develop lies largely in the hands
of the providers. According to study results, annual expenditure on Apple apps in
Germany alone would total roughly 25 million euros. Given the current trend, this
figure is set to rise dramatically across Europe.


Apple leads the race

iPhone and BlackBerry top the list of smartphone providers. Together they
account for over 80 percent of the survey respondents’ smartphones. Apple can
benefit considerably from the popularity and market power of its app store, which
is the most effective at converting visitors to users. In total, 90 percent of iPhone
or iPod touch owners have heard of the app store and 80 percent have visited
the app store. All of the survey respondents who had visited the Apple app store
in the previous three months also downloaded something. The situation for


                  SIMON KUCHER & PARTNERS Strategy & Marketing Consultants
Amsterdam Bonn Boston Brussels Cologne Copenhagen Frankfurt London Luxemburg Madrid
      Milan Moscow Munich New York Paris San Francisco Tokyo Vienna Warsaw Zurich
          Haydnstraße 36 – 53111 Bonn - Germany - Tel: +49/228/9843-372 - Fax: +49/228/9843-380
Apple’s main competitor is quite different. Although BlackBerry is widespread in
the business sector, only about 30 percent of BlackBerry users are familiar with
their app store.


80 percent of the downloads are free of charge

It doesn’t matter if it’s Apple or Blackberry: More than 80 percent of the
downloaded apps are free of charge. However, about 75 percent of apps
available in the Apple store cost money. “Users are less choosy about free apps
and also download free apps that are less important to them, while paid apps
have to offer a real benefit”, explains consultant Ehrhardt.


People who visit an app store once usually return. According to the study, one
user of the Apple app store downloads ten apps per quarter on average – two of
them are paid apps at an average fee of 3.50 euros each. In comparison, at
BlackBerry’s app store visitors downloaded only about five apps and they only
buy one app for 5 euros each. Extrapolating the figures from the study, a typical
Apple customer would spend about 30 euros a year on apps, whereas a
BlackBerry customer would spend only 20 euros. Assuming that there are one
million iPhones and iPod touch devices in Germany and that 77 percent of their
owners visit app stores (as in the survey), annual expenditure on Apple apps
would total roughly 25 million euros. “Given the flood of apps and the expected
surge in demand following the launch of the iPad on May 28th, this figure is set to
rise dramatically”, says Annette Ehrhardt.


Price is the most important criterion when buying an app, closely followed by
recommendations from friends and reviews from other customers. The typical
social media behavior (use of comments, recommendations) is applied in the app
store: An app that has something to offer and is recommended by others can
certainly have a price tag attached.




                  SIMON KUCHER & PARTNERS Strategy & Marketing Consultants
Amsterdam Bonn Boston Brussels Cologne Copenhagen Frankfurt London Luxemburg Madrid
      Milan Moscow Munich New York Paris San Francisco Tokyo Vienna Warsaw Zurich
          Haydnstraße 36 – 53111 Bonn - Germany - Tel: +49/228/9843-372 - Fax: +49/228/9843-380
There are still profits to be made

The hype surrounding smartphone apps is expected to continue for a while –
especially when users start downloading many more apps than they do today.
Considering that the average number of app downloads is ten per quarter, even
the industry giant Apple still has considerable potential left to exploit. Whereas
almost every visitor to Apple’s app store downloads something, the other players
need to make their stores better known, more user-friendly, and more
comprehensive. Although about three-quarters of apps available from Apple’s
store cost money, the participants in this Simon-Kucher study choose free apps
in 80 percent of their downloads. In other words, nobody is making a fortune
from apps at the moment. “To make the mobile internet really lucrative for app
providers, the range of paid apps needs to be extended instead of giving away
most content for free”, advises industry expert Ehrhardt. How this emerging
market will develop therefore lies largely in the hands of the providers.




Annette Ehrhadt is Director with Simon-Kucher & Partners in Zurich and
focuses on media, telecommunications and Internet.


Simon-Kucher & Partners, Strategy & Marketing Consultants:
Simon-Kucher & Partners is a global consulting firm with approximately 450
consultants in 20 offices worldwide focusing on Smart Profit GrowthSM. Founded
in 1985, the company has 25 years of experience providing strategy and
marketing consulting and is regarded as the world’s leading pricing advisor.

For further information please contact: Claudia Schulz (Public Relations Manager),
Tel: +49 228 9843 372, Fax: +49 228 9843 380, E-mail: Claudia.Schulz@simon-
kucher.com; Saffi Haines (Public Relations Manager), Tel: +44 20 7841 5750 Fax:
+44 20 7841 5751, E-mail: Saffi.Haines@simon-kucher.com.

www.simon-kucher.com



                                             ###



                  SIMON KUCHER & PARTNERS Strategy & Marketing Consultants
Amsterdam Bonn Boston Brussels Cologne Copenhagen Frankfurt London Luxemburg Madrid
      Milan Moscow Munich New York Paris San Francisco Tokyo Vienna Warsaw Zurich
          Haydnstraße 36 – 53111 Bonn - Germany - Tel: +49/228/9843-372 - Fax: +49/228/9843-380

				
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Description: App store that application store, the store is usually understood as the application. App Store is an Apple iPhone and iPod Touch as well as the iPad created service that allows users to browse and download from the iTunes Store for iPhone SDK development of a number of applications. Users can buy or free trial, so that the application is downloaded directly to iPhone or iPod touch. Which includes: games, calendar, translation programs, library, and many useful software.