The UK App Economy 2014

The UK has been quick in adopting smartphones, tablets and apps with smartphone penetration expected to reach 74% by the end of 2014. But beyond the benefits that one can derive from using apps, there are potentially much bigger benefits in creating apps, or creating an app industry for that matter.

We’re happy to present our new research report, charting the mobile app economy in the region, investigating revenues, jobs, the profile of the British app developer, and how the UK can provide better opportunities for developers (you can download the full report here).

06 UK App Economy

VisionMobile set out to assess the state of the UK app industry in 2014 and find out whether the UK is on the right track to becoming a vibrant and global hub for the app economy. Our findings are based on our Developer Economics survey series (our 7th edition reaching over 10,000 app developers) and a UK App Developer Census survey of over 300 developers across the country.

We estimate the UK app industry will exceed £4 billion in revenues in 2014 and will be growing at a CAGR of 38% between 2013 and 2015 and 22% between 2013 and 2025. The UK has approximately 8,000 companies that are directly involved in app development and approximately 380,000 jobs centred around the app economy. We expect that approximately 30,000 new jobs will be created in the in the next 12 months.

UK-mobile-app-jobs

Most of the UK app industry is concentrated around Greater London, which is home to 31% of UK app companies while the South East hosts another 24% of app companies. There are several app startup hubs located in Brighton, Cambridge, Birmingham, Bristol and Edinburgh, however these are much smaller in scale than London.

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The UK is certainly among the top global tech hubs with several metrics indicating that it is in fact the biggest tech hub in Europe and most likely the second most important tech hub after the US. In 2013 the UK accounted for over a third of the total app revenues generated in EU28 and slightly less than a fifth of all app developers in the EU28.

The UK app economy attracts developers & designers across all ages, from teenagers to 65+ year olds, with 4% being 17 years old or younger. Female app developers or designers account for just 8% of the developer/designer population.

UK-mobile-developer-demographics
44% of app developers and designers in the UK generate most of their income from apps, while 22% generate no income from apps. These are most likely Hobbyists and Explorers for who app revenues is not the primary goal, or early stage startups that have yet to monetise their products. The average salary of developers and designers that generate all their income through apps is £47,000, which is well above UK average salaries.

83% of app developers and designers are self-taught and only 7% have attended a Bootcamp or other taught course. This indicates a gap in the market for affordable training for app developers.

Overall, app developers and designers are pleased with career prospects, flexibility, income and work life balance. But they are quite critical of the UK as a technology hub and the support it provides, highlighting gaps in training and mentoring, funding, industry presence and support, particularly outside of London.

The UK has gathered a lot of momentum in the past two years and the government has been visibly supportive of the startup economy, introducing several incentives and investment in infrastructure. However, there are several areas where more work needs to be done in order to sustain this momentum: continuing tax incentives, providing affordable training, even at an early age, cutting the red tape for fledging startups, educating entrepreneurs about funding resources and support schemes. Industry must also strengthen its support in these areas and confirm this support through developer events across the UK.

Looking for more insights? Download the full report for free!

Emerging developer opportunities in Enterprise & Productivity apps

[Andreas Pappas shares our latest findings, from our Business & Productivity Apps report which takes a look at developer opportunities created by emerging trends in enterprise mobility (such as bring-your-own policies and mobile SaaS) and professional and vertical app markets (e.g. healthcare apps). This market was worth $28 billion in 2013 and is set to grow to $58 billion by 2016.]

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[Want to help us with data for our reports? We’ve just launched our latest Developer Economic survey – take the survey and have your say on the latest trends]

[tweetable]Apps are changing the way people communicate, work and play[/tweetable]. App development has grown into a huge industry, that we estimate to be worth $67 billion in 2013. We expect the app economy to more than double in size by 2016.

Most of the publicity and media spotlights currently fall on superstar consumer apps like Angry Birds or Candy Crush Saga and communication apps like WhatsApp. These success stories have certainly highlighted the massive scale and revenue potential of mobile apps, reaching from zero to tens of millions of users in record-breaking time.

At the same time, a growing audience of prosumer and business users depend on Box, Evernote and Trello to help them be more productive in their work. Enterprises are now allowing employees to use the apps they love at work, inside the corporate Intranet. Organisations of all shapes and sizes are integrating mobile apps within their business processes. This mobilisation creates a demand for off-the-shelf or custom mobile apps and services, translating into new and bigger opportunities for mobile app developers.

Most app developers currently target consumer app markets (think games and lifestyle apps) but they could be missing out on opportunities in the enterprise (aka business & productivity) market. Our research indicates that the business & productivity app market, is not only growing at approximately the same rate as the consumer app market but is also less congested, and offers better revenue potential, for more developers. Read the report to find out more.

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Consumer vs. Enterprise & Productivity apps: how do revenues compare

App publishers that target business and productivity markets have a much better chance of generating sustainable revenue than those targeting consumer markets, with just 32% of them below the “app poverty line” ($500 per app per month) compared to just under half of consumer-focused publishers (48%). At the same time, [tweetable]publishers that target businesses or professional users have a much higher chance to generate very high-revenues[/tweetable]: 16% of those targeting the business & productivity market generate revenues exceeding $500,000 per app per month, compared to just 6% among consumer-focused publishers.

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While consumer apps and particularly games (e.g. Angry Birds, Candy Crush Saga) can generate extraordinary revenues, it is quite clear that this is not the case for the vast majority of developers that target consumer markets. Business & Productivity apps allow developers to build a sustainable business around more solid business models with recurring revenues from a loyal customer base.

As bring-your-own policies and enterprise app stores become increasingly popular among businesses, the market and the opportunity for developers is likely is set to expand in the next three years.

Which platform should you prioritise if you build business and productivity apps?

While Android is dominating the consumer market in terms of market share, iOS maintains a healthy lead among professional and business users. Data provided by enterprise cloud content platform Box, indicates that 94% of their tablet users are on iPads, while enterprise mobility management services provider Good Technology indicates that 54% of enterprise smartphone activations came through iPhone devices in Q4 2013. It is clear that Apple has an edge in the business device market and this is also reflected in revenues generated via iDevices: VisionMobile estimates that revenue generated via iOS devices accounts for at least 60% of the total revenue in the business and productivity market.

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For developers that target the business & productivity sector it makes sense to prioritise iOS for development over the other platforms they develop for. However, there are several considerations to take into account such as integration with existing enterprise services, which may call for an HTML approach or the specific market that you target.

Where are the opportunities in the enterprise app market?

There is an inherent unpredictability associated with the future use of apps and it is exactly this unpredictability that empowers developers to create innovative apps that continue to redefine whole markets and industries. Nevertheless, we can still identify a number of areas that currently attract considerable attention among businesses and where we see future value being unleashed in the business & productivity market:

Vertical apps
Specialised industry apps such as healthcare, real estate, finance or automotive. Vertical specialisation provides a great opportunity for differentiation and for building strong brands as the app economy diffuses into every single industry. Existing industry stakeholders can leverage apps as a differentiation strategy against “un-apped” competitors, integrating apps and exposing APIs across their product offerings. For independent developers, specialisation is a means to capture a niche and survive the discoverability labyrinth.

Productivity/BYO
Apps that cross the boundaries between private-use and work-use, such as storage, lists, calendars, office-type apps are key drivers behind the consumerisation of enterprise IT. Once into an organisation or an enterprise app store, such apps can spread rapidly within organisations.

Mobile SaaS
Software-as-a-Service, delivering CRM, HR, ERP, BI services to small businesses and large enterprises is a booming sector. Mobile apps extend these capabilities much further by allowing anytime/anyplace access to these core business services.

Custom apps/services
Bespoke mobile solutions delivered outside of app stores will continue to take the lion’s share of revenues within the business and productivity app market. As we discussed, the dominance of this model will erode during the next few years as app store purchases increase among enterprises.

MDM/MAM
Apps and services that tackle security and complexity of the decentralised IT department are already essential for any enterprise that adopts BYO policies. More sophisticated app & device management models, that tackle some of the key issues associated with this trend (e.g. managing private/work services, remote deletion of work content) will continue to be hot areas in the next few years, catering to an increasing number of use cases.

Download our free “Business and Productivity Apps” report to find out more about the developer opportunity in this market and the reason you should be developing business and productivity apps.

Have your say in Developer Economics research
Help us continue bringing you great insights about the app economy and app development. Take part in our 7th Developer Economics survey that is launching today! Help us break our earlier world record of 7,000 app developers that took our 6th survey. Take part, spread the word, win prizes and help us do great research !

Developer Economics: Ecosystem wars drawing to a close

Welcome to the brand new Developer Economics report! Now in its fourth year and 6th edition, the latest Developer Economics survey reached over 7,000+ developers across 127 countries, setting new standards in developer research.

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Get your free copy here and read about the movers and shakers in the app economy. Dive deep into our rich dataset and discover how developers select and prioritise platforms, which developer tools they use and how their choices translate to revenues.

As always, we have a lot more data available so get in touch (moredata@visionmobile.com) to get the data you need if you can’t find it in the report. Continue reading Developer Economics: Ecosystem wars drawing to a close

How do developers prioritise platforms? iOS vs Android vs HTML5

How do developers perceive different platforms and how is their platform choice affected by the type of apps they developed or the way they define success? Andreas Pappas looks into the data from VisionMobile’s Developer Economics survey in Q3 2013 to shed some light on these questions.

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Not long ago, the choice of a mobile platform, i.e. which mobile platform to support was a key question for developers. That question has more or less been addressed now: iOS and Android accounted for 94% of smartphone sales in Q3 2013 and there is little doubt that they will continue to dominate the market in the years to come. For organisations that require massive scale, combined with all the perks of a mobile ecosystem (monetisation, distribution, platform services), iOS and Android are the platforms of choice with a combined Mobile Developer Mindshare of over 85% based on the last Developer Economics survey in Q3 2013. Continue reading How do developers prioritise platforms? iOS vs Android vs HTML5

App trade: a global opportunity

As we launch our new Developer Economics survey [UPDATE: Survey now closed – results out Jan 2014], Senior Analyst Andreas Pappas quantifies the international dimension of the app economy to visualise app trade routes. With barriers to international expansion disappearing, today’s app economy knows no borders. But almost 50% of developers are not yet crossing those borders.

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One of the things that make app development attractive to developers is the relatively low effort involved in selling apps across international borders, compared to other forms of international trade. The low barriers to selling apps internationally make app development attractive even in regions where smartphone penetration and app consumption has yet to reach a level that can effectively support local app development. This is the case in Asian countries with smartphone penetration below 20%, compared to over 50% in Western Europe. To some extent, app development is even more attractive in Asian regions, as labour and other costs are lower, compared to western app economies. Continue reading App trade: a global opportunity

[Report] The EU App Economy: 530,000 jobs and rising

The rise of app ecosystems has put the US in the front seat of the mobile industry, a place once held by Europe with its strong pedigree in mobile technology. However, Europe continues to be a major force in mobile app ecosystems, with its contribution to the global app economy being second only to the US. With competition from high-growth markets rising, Europe needs to become a global hub for mobile startups in order to maintain this position.

European App Economy

The economic crisis that has plagued Europe for the past few years, has had and continues to have a major impact on the labour market, particularly in the South. Unemployment rates in Southern Europe exceed 25% with youth unemployment surpassing 50%.

Yet, the app economy has been expanding rapidly; as indicated in our latest report, the European App Economy 2014 commissioned by ACT4apps and co-authored with Plum Consulting, Europe is a major force in the global app ecosystem and is directly responsible for over 500,000 jobs in the EU28 region. The report was hailed as a “wake-up call” for the EU by European Commission vice president Neelie Kroes, who is responsible for the EU digital agenda. Continue reading [Report] The EU App Economy: 530,000 jobs and rising

Developer Economics: App market forecasts 2013-2016

The global app economy was worth $ 53Bn in 2012, and expected to rise to $ 143Bn in 2016. As part of our new Developer Economics: App Economy Forecasts 2013-2016 report, Senior Analyst, Andreas Pappas, examines developer population, platforms, revenues, and revenue models and shows how app store sales are just a small part of the app economy.

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In the past few years the mobile industry has experienced a powerful upheaval sparked by the launch of the first iPhone and the creation of the first, true app ecosystem. This event brought about a gradual restructuring of the mobile value chain and a steady shift in value from the traditional pillars of the mobile economy, telco services and mobile handsets into app ecosystems. This emerging component of the value chain is what we call the “mobile app economy” and it represents the fastest growing area in the mobile value chain today and will continue to do so in the foreseeable future. Continue reading Developer Economics: App market forecasts 2013-2016

A Game of Ecosystems: Measuring ecosystem performance

[How do ecosystem economics shape the mobile competitive landscape? What are the key performance indicators and how should app ecosystem stakeholders evaluate opportunities? Andreas Pappas seeks answers to these not-so-trivial questions in this, first post, in a series of blog-posts on ecosystem economics.]

VisionMobile - Game of Ecosystems

Measuring ecosystem performance

Since 2008 we have witnessed the rise of mobile app ecosystems – iOS, Android, BlackBerry and Windows Phone giving rise to millions of apps and billions of smartphones. We have also witnessed the collapse of legacy mobile platforms – Symbian, Java ME and BREW. This has led to this shift in mobile platforms, and the rapid growth of smartphones.

The cause of this upheaval in the mobile and software industry had less to do with the openness of Android or the user experience of Apple and more to do with a change of business models. Legacy mobile operating systems (e.g. Symbian) were designed around handset makers’ business models. As such, they were optimised to improve supply efficiencies in terms of cost and performance.

In contrast, new mobile app ecosystems (e.g. Android) are being designed around developers’ business models. As such, iOS, Android and Windows Phone are optimised to create and sustain demand from both users and developers. Continue reading A Game of Ecosystems: Measuring ecosystem performance

Which apps make more money?

[How do app developer revenues vary by country, or platform? Does the number of platforms make a difference to app revenues? Which models bring in the most revenues? We revisit our November analysis of app monetisation with more insights from our Developer Economics 2013 survey across 3,400+ developers – while launching our latest survey, which is available here]

New Developer Economics survey

Back in November, we looked at which apps make money based on research on how app revenues vary by platform, app category, country and more. In this article we update our analysis on app monetisation based on the latest research from Developer Economics 2013 across 3,400+ app developers, including analysis that did not make it into the report.

We ‘re also proud to launch our very latest Developer Economics survey, which reaches across thousands of app developers and provides the data for our famous state of the developer nation reports. Thanks to the sponsorship by BlackBerry, Mozilla, Intel and Telefonica it possible to provide these reports and additional insights, for free, to the entire mobile community.

Take part in the survey, spread the word and help us drill deeper into the app economy and what makes it tick. We have prizes aplenty for developers, with 7 devices up for grabs (one iPhone 5, two Samsung Galaxy SIII, two Nokia Lumia 920 devices and two BlackBerry Dev Alpha handsets) – plus an AR Drone 2.0, a Nest Learning Thermostat and a Nike Fuel Band for participants who also subscribe to our developer panel. Last, but definitely not least, our friends at Bugsense are giving away one month of free crash reporting to each and every participant.

[ab_testing prettylink=’blogDS13′] Continue reading Which apps make more money?

Developer Economics 2013 – Key Insights

[We’ve just published Developer Economics 2013: the tools report. This report [vm_form_download link_text='(free download)’ product_id=’3789′]! is based on a large scale survey across 95 countries and 3,460 developers. This is the definitive guide on the app economy packed with facts and figures about the platforms, screens and revenue models that developers are using. In this edition we take a close look into the tools and services that developers use to create, monetise and market their apps, including Ad networks & exchanges, Cross-platform tools and Backend-as-a-Service.]

In this article, you’ll find all key insights from the report – please give us your feedback and leave a comment below. Also – keep an eye out for more Developer Economics articles, and don’t forget to visit our newly launched Developer Economics portal!

Developer Economics 2013

Mobile market duopolies

Mobile handset Industry growing at 23% CAGR. Despite the doom and gloom circling many mobile handset makers, the industry has been on a steady growth trajectory achieving a 23% CAGR in revenues since 2009. Underlying this growth are the increasing smartphone sales that now account for over 40% of all handset sales, fuelled by low cost Android devices that are rapidly eating away feature phone market share. Continue reading Developer Economics 2013 – Key Insights