App Market Problems for Building Profit

    By Lauren Bringle | Small Business

    Today the App market is exploding. As users increasingly move away from the computer screen and onto their phones and tablets, they desire to take their social media lives, games and businesses on the road. With the change in hardware and the type of interface, it seems that there is an App for everything. Given the invasive spread of the App market, and the numbers surrounding it, you would think that the industry is wildly profitable.

    By the end of this year, the App market is projected to reach revenues of nearly $81 billion. The forecast also calls for an increase in revenue to $310 billion by the year 2016. While the figures look staggering, is the App market really a profitable industry?

    According to Airomo, a company that strives to streamline the matching process between App owners and users, there are several problems that make the App business challenging.

    First and most importantly is what Airomo identifies as the App Discovery Problem. With trial and error discovery changing the buying patterns of the average consumer, 26 percent of Apps are used only once or are uninstalled immediately. Only about 20 percent of all downloaded Apps are used for longer than one week. And only 16 percent of Apps are used more than ten times total.

    However, the most notable problem is that customers prefer free Apps. And who can blame them, with thousands of free Apps available for fast download on the web? This causes many users to hesitate in downloading paid Apps that charge an average cost per install of $1.50. With prices this low, or in the case of free—non-existent, many App owners cannot acquire enough users to break even with their overhead costs, much less to turn a profit.

    Airomo believes that the solution to this problem involves providing more efficient App discovery models and connecting users with friends’ Facebook Apps. This social selection ranking, in conjunction with a search engine based on semantic relationships between words, instead of identifying specific text could provide the boost needed by App industry owners to connect with paying users.

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