ACMA research snapshots

Mobile apps: putting the ‘smart’ in smartphonesSnapshot 4

Nearly nine million Australians download mobile apps

ACMA research shows that 68 per cent of Australians (8.9 million) with an internet-enabled mobile phone downloaded a mobile application—commonly referred to as an ‘app’— in the six months to May 2013.

What are apps?Apps are free or purchased software programs that can be downloaded and installed onto smartphones and other communication devices such as tablets and MP3 players, making it easier for internet users to access online services via mobile devices.

Why apps?Apps put the ‘smart in smartphones’, adding functionality to these devices and allowing an individual user to personalise a phone as well as online experiences. As smartphone ownership grows, consumers are looking not only for elegant interfaces and intuitive technologies but also for a wide range of apps to increase the scope of what the device can do for them.1

Early adoptersYounger people tend to be early adopters of new technology and have higher levels of smartphone and apps usage than other Australians (Figures 1 and 2).

At May 2013, 89 per cent of people aged 18–24 years had a smartphone and 83 per cent of this age group downloaded an app in the six months to May 2013. In comparison, 22 per cent of people aged 65 years and over had a smartphone but only nine per cent downloaded an app in the same period.

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Figure 1 Smartphone ownership, by age Figure 2 Australians downloading apps, by age

18–24 25–34 35–44 45–54 55–64 65+

89% 85% 81%

65%

49%

22%

Age groups

18–24 25–34 35–44 45–54 55–64 65+

83%76%

66%

48%

30%

9%

Age groups

Note: Relates to downloading of apps in the six months to May 2013.Base: Total population in each age group.Source: ACMA-commissioned survey, May 2013.

Younger Australians are more likely to download apps that other Australians (Figure 3). For internet-enabled mobile phones users in general:> people aged 18–24 years were 30 per cent more likely to download an app> those aged 25–34 years were 25 per cent more likely to download an app.

Figure 3 Likelihood of downloading an app, by age

Base: People who have an internet-enabled mobile phone.Source: ACMA-commissioned survey, May 2013.

Something for everyoneAll those who downloaded a mobile app in the six months to May 2013 reported at least one benefit of using apps. The most common benefit—reported by 53 per cent of apps users—was the ease with which they could use online services via their mobile phone, such as online banking and shopping. Forty-seven per cent said apps gave them immediate access to the services they required (Figure 4).

Figure 4 Benefits of using mobile apps

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Base: Mobile apps users.Source: ACMA-commissioned survey, May 2013.

More than you bargained for?Although all app users report at least one benefit of using apps, the Australian Communications Consumer Action Network has identified a number of issues and related concerns in terms of apps.2 These are outlined in Table 1.

Table 1 Issues and concerns relating to apps

Issue Concerns

Access to personal information

How does an app use the personal information it collects?

What personal information can the app access on the device?

What personal information will the app share with third parties?

Hidden costsof the app

In-app purchasing options

Unauthorised or accidental in-app purchases (for example, by young children)

Data usage when using app

Content safeguards In-app advertisements

Links to social networking sites and/or in-app chat features

Location-based features

The ACMA, in its occasional paper, Mobile apps—Emerging issues in media and communications, highlighted that ‘the widespread take-up and use of apps is also raising new issues in the protection of digital citizens’.3

ACMA research found more than two-thirds of consumers were concerned about the level of information they share when using location services. Sixty-seven per cent felt

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that they should be informed if a location service was collecting information about them.4

Other agencies have also identified potential concerns for consumers who are downloading and using apps:> In September 2013 the Australian Competition and Consumer Commission

announced it was examining 300 apps that ‘…claim to be free but do not disclose that significant in-app purchases are required to maximise the experience of the app’.5

> The Office of the Australian Information Commissioner found that 48 per cent of Australians believe smartphone apps collect information about the users, with some opting not to use an app because of concerns about the way their personal information would be used.6

Apps and smartphones go hand-in-handGiven the symbiotic relationship between smartphones and apps, growth in the smartphone market naturally leads to growth in the app market. During 2012–13, smartphone ownership in Australia increased by 29 per cent to 11.2 million.7 This reflects the worldwide growth in smartphone ownership. In the 12 months to June 2013, the volume of smartphone shipments increased by 51 per cent to 236 million units worldwide.8 Similarly, various providers of apps have reported growth in both the number of apps downloaded and the number of apps being developed and made available in their stores (Table 2).

Table 2 Top four app providers

App provider Number of apps downloaded Number of apps available2012 2013 2012 2013

Apple App Store 30 billion9 50 billion10 650,00011 900,00012

Google Play 20 billion13 50 billion14 500,00015 1 million16

BlackBerry World 3 billion17 5 billion18 90,00019 235,00020

Windows Phone Store n/a 2 billion21 100,00022 160,00023

The growth in the mobile apps market has also been a catalyst for growth in the volume of data being downloaded via mobile phones. During the June quarter of 2013, mobile phone internet users downloaded 19,636 terabytes of data— a 97 per cent increase over the June quarter of 2012.24

What’s in it for me?App stores make an extensive range of apps available to consumers to download including games, social networking, banking and finance, productivity, transport, shopping, education and sport.

Games are the most popular type of app and are being downloaded by 66 per cent of Australian app users (Figure 5).

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Figure 5 Types of apps downloaded

Games

Social networking

Banking and finance

Productivity and tools

Travel and lifestyle

Transport

Education

Shopping

Sports related

Other

66%

59%

49%

48%

41%

35%

33%

33%

27%

8%

Per cent of people who downloaded an app in the six month to May 2013

Source: ACMA-commissioned survey, May 2013.

A playground of appsIn September 2013, games and social networking apps featured heavily among the top five downloaded apps—free and paid—in the two major app stores (Table 3).

Table 3 Top 5 apps downloaded in Australia during September 2013 from the Apple and Google Play app stores

Apple App Store, free apps Google Play Store, free apps

Rank App Type App Type

1 Candy crush saga Games FacebookSocial networking

2 Pet rescue saga Games Candy crush saga Games

3 SnapchatSocial networking

SkypeSocial networking

4 Deer hunter 2014 Games SnapchatSocial networking

5 Where’s my water? 2 Games ViberSocial networking

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Apple App Store, paid apps Google Play Store, paid apps

Rank App Type App Type

1 Angry birds star wars II Games SwiftKey keyboardProductivity and tools

2 Heads up! Games Minecraft Games

3 Minecraft Games TripView Sydney Travel & lifestyle

4 Stickman downhill GamesWorms 2: Armageddon

Games

5 Fitness buddy Travel & lifestyle Nova launcher primeOther-personalisation

Source: Distimo Leaderboards, September 2013

Want more?Although game apps are the most popular download, 19 per cent of app users downloaded apps from two different categories. The most popular combination was games and social networking apps. A further 16 per cent download four types of apps with the most popular combination being games, banking and finance, social networking and shopping (Figure 6).

Figure 6 App combinations

Note: Seven types is 7%, eight types is 5% and nine types is 3%. Base: People who have downloaded an app in the six months to May 2013.Source: ACMA-commissioned survey, May 2013.

Timing is everythingThe majority of app users (72 per cent) either download an app once a month or less than once a month. Twenty percent download an app on a weekly basis, seven per cent a couple of times a week and two per cent on a daily basis.

In comparison to mobile app users in general, people aged 18–24 were 51 per cent more likely to download an app a couple of times a week.

Revenue from appsIn 2012, Australia was the fourth largest app market by revenue—combined revenue of Google Play and Apple App Store— after the USA, Japan and the UK.25

In Australia’s digital economy, apps can both challenge traditional business models and offer businesses opportunities for diversification of their revenue streams. Apps

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are available to the consumer either for free or for a fee. Both options can provide additional revenue to business (Table 4).

Table 4 Revenue models for mobile apps

Revenue model Definition

Paid-for apps User pays a fee to download the app.

In-app purchasesUsers pay a fee to access additional content and/or services—such as restricted levels, virtual money, or additional lives—with the transaction occurring from within the app.

SubscriptionsSimilar to in-app purchases, users set up automatic payments to replenish additional content or services.

In-app advertisementsWhen using the app, advertisements, such as banners or flash screens, are displayed to the user. This usually occurs within free or ‘freemium’ apps.

m-CommerceApps facilitate an ordering and/or payment transaction, such as ordering a pizza to be delivered or purchasing clothing to be shipped.

Bundled with hardware or services

An app is sold (or made available) as part of a package with a piece of hardware, such as a barcode reader, or a service, such as a weight-loss program.

Productivity tools for business processes

Apps are used by employees to improve efficiency gains for internal and external processes, such as service technicians remotely logging and updating jobs.

Cost reduction for business processes

Apps are accessible to multiple users to share and update information.

Source: Vincenzo Serricchio, ‘In 2012 smartphone users spent US$ 8 billion for paid apps in the top 5 app platforms’, Research2Guidance, 22 January 2013

Worldwide direct revenue from apps—including paid-for apps, in-app purchases and subscriptions—grew nine per cent in the first quarter of 2013 to US$2.2 billion.26 In 2011, in-app advertising made up a further 18 per cent of revenue derived from apps.27

Show me the money!For Australian small and medium enterprises (SMEs), the app market and the benefits of apps to the business are still to be effectively realised, with only three per cent of SMEs producing a business-related app.

However, 18 per cent of SMEs have developed a mobile-optimised website to assist people who are using small-screen devices, such as mobile phones and tablets, to access their website. Only two per cent of SMEs have produced both an app and a mobile-optimised website.28

Going globalA large proportion of Australian mobile phone owners are downloading apps, relative to those in other countries (Figure 7). In 2013, 54 per cent of Australians who used a mobile phone downloaded an app compared to 50 per cent in the USA29, 29 per cent in the UK30 and 21 per cent in France.31

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Figure 7 International comparison of mobile phone owners who have downloaded an app

Bases: Australia and USA: all mobile phone owners aged 18+, UK: all mobile users aged 16+, France: all mobile users aged 12+Note: The period for which mobile phone owners/users downloaded apps is not defined for the USA, UK or France.

An app for all devicesAs noted by one of Australia’s top banks said: ’customer uptake of new technology is changing business models around the world...and customers expect to be able to do everything they want on whatever device they are using at whatever hour of the day it is.’ 32

It is not only the ongoing development and take-up of mobile apps that will contribute to realising this expectation. Consumer devices in the home environment are increasingly becoming more mobile and more connected. Figure 8 shows increases in the use of mobile phones, tablets, internet-enabled TVs and Mp3 players to access the internet. As these technologies develop and expand, so too will the apps that add functionality and personalisation to consumer devices.

Figure 8 Devices used to access the internet from home

Laptop computer

Desktop computer

Mobile phone

Tablet Television Portable games console

Mp3 player Other games console

78 7361

2919

10 14 16

75.569 67.1

47

23.1

7.215.3 14.9

May-12 May-13

% o

f int

erne

t use

rs a

ged

18 y

ears

and

ove

r

Note: Multiple responses allowed.Source: ACMA-commissioned surveys, May 2012 and May 2013.

The future for appsThe mobile apps market, though large and diverse, is still in its infancy. Apps are at the forefront of a shift from the way consumers use and interact with traditional media, communications, entertainment and software. In particular, apps are being used to

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deliver content that, until recently, has been delivered through traditional means, such as linear (scheduled and non-interactive) TV viewing, fixed-line and mobile telephony or SMS. Table 5 presents some related examples and the potential threats these pose to traditional content and voice revenues.

Table 5 Examples of challenges to traditional content and voice revenues from apps

Content Traditional delivery Delivery via apps

Movies and television programs

Scheduled and limited viewing times.

Video-on-demand companies such as Netflix are offering commercial-free, on-demand, unlimited viewing across devices and networks. This may develop as an alternative to traditional linear TV viewing formats33 (along with online catch-up TV services), particularly with ongoing innovation in smart TVs and their growing capacity to interact with smartphone and tablet devices via free apps.34

Broadcasters derive revenue through embedded advertising.

Voice communications

Use of carriers’ network. For over-the-top (OTT) apps for voice and video communications, a major factor driving usage is accessibility from multiple devices, including laptops, smartphones and tablets, and networks.35 In the UK, 43 per cent of mobile operators say that Skype presents a major threat to their revenues. OTT communications such as Skype are already estimated to be costing the global telecommunications industry $36.5 billion per year.36

Carriers derive revenue through line rental and/or call costs.

SMS and texting Use of carriers’ network. In the 12 months to June 2013, the number of active users of the messaging app WhatsApp grew by 233 per cent with the number of daily messages increasing from two billion to 10 billion.37 Commentators globally have highlighted expectations of a decline in messaging revenue primarily due to the rise of IP and social messaging applications.38

Mobile carriers derive revenue from mobile phone plans.

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Background to this snapshotData in this snapshot is taken from the two surveys commissioned by the ACMA, conducted in May 2013, including a:> household survey of 2,400 consumers aged 18 years and over, including mobile-

only consumers> business survey of 1,500 small and medium-sized enterprises—employing less

than 200 staff— with a fixed-line telephone.

This snapshot also references research from external sources, including:> Office of the Australian Information Commissioner> Australian Competition and Consumer Commission> IDC mobile phone tracker> Distimo app analytics> Pew internet project> Office of Communications (Ofcom)> Autorité de Régulation des Communications Électroniques et des Postes ( ARCEP)> Mobile Squared.

This is the fourth in the ACMA’s research snapshots series and follows:> Australians cut the cord—5 July 2013> The connected business—15 October 2013> Home is where the work is: the digital worker—16 October 2013

Each snapshot covers a single issue and allows the ACMA to focus on convergence and digital economy topics of interest to stakeholders. The snapshots and other ACMA research are online at www.acma.gov.au.

Comments and enquiries about research snapshots should be sent to communications.analysis@acma.gov.au

Further informationJoin the conversation and follow us on Twitter @acmadotgov

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End notes

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1 A.T. Kearney & GSMA, The Mobile Economy 2013, p51, viewed 17 September 2013. 2 Australian Communications Consumer Action Network, App purchases by Australian consumers, Submission to the Commonwealth Consumer Affairs Advisory Council, February 2013.3 ACMA, Mobile apps—Emerging issues in media and communications, Occasional paper 1, May 2013.4 ACMA, Here, there and everywhere—Consumer behaviour and location services, December 20125 Australian Competition and Consumer Commission, ‘ACCC joins international sweep for apps targeting children’, media release, 10 September 2013.6 Office of the Australian Information Commission, Community Attitudes to Privacy Survey, Research Report 2013 . 7 ACMA-commissioned survey, May 2012 and May 2013.8 IDC worldwide quarterly mobile phone tracker, August 2013.9 Dan Seifert, BlackBerry App World hits 3 billion downloads since launch, Mobileburn, 9 July 2012.10 Charles Arthur, ‘Apple and Google app downloads reveal rate of smartphone growth’, The Guardian, 17 May 2013.11 Dan Seifert, ‘Apple announces 650,000 apps in the iTunes App Store, 225,000 for the iPad’, Mobileburn, 11 June 2012.12 Charles Arthur, ‘Apple and Google app downloads reveal rate of smartphone growth’, The Guardian, 17 May 2013.13 Dan Seifert, ‘BlackBerry App World hits 3 billion downloads since launch’, Mobileburn , 9 July 2012.14 Andrew Kameka, ‘1 million Android apps are now available in Google Play’, Mobileburn, 24 July 2013.15 ibid.16 ibid.17 Dan Seifert, ‘BlackBerry App World hits 3 billion downloads since launch’, Mobileburn, 9 July 2012.18 Blackberry World, June 2013.19 Brian Heater, ‘RIM marks three billion BlackBerry app downloads, wants to set the record straight about App World’, engadget, 8 July 2012.20 Blackberry World, June 2013.21 Todd Brix, Windows Phone Developer Blog, Windows, 6 August 2013.22 Dan Seifert, ‘Microsoft's Windows Phone Marketplace sees 100,000 app submissions’, Mobileburn, 5 June 2012.23 Daniel Rubino, ‘With 160,000+ apps, Microsoft breaks down the numbers for the Windows Phone Store’, Windows Phone Central, 26 June 2013.24 Australian Bureau of Statistics, 8153.0-Internet Activity Survey, June 2013.25 Distimo, 2012—Year In Review, 2012.26 Canalys, ‘11% quarterly growth in downloads for leading apps stores’, 8 April 2013.27 Peter Farago, ‘The great distribution of wealth across iOS and Android apps’, Flurry, 31 July 2012.28 ACMA-commissioned survey of SMEs, May 2013.29 Pew Internet, Cell phone activities 2013, September 2013.30 Ofcom, The Communications Market Report, 201331 ARCEP, Arcep’s Annual report 2012, June 2013.32 Peter Dinham, ‘...and Westpac NZ spends $15 million on ‘mobile transformation’’, CommsWire, 26 September 2013.33 Netflix, Netflix Long Term View, viewed 17 September 2013.34 ACMA, Communication report 2011-12 series, Report 1—Online video services in Australia: Latest developments in the supply and use of professionally produced online video services, released 10 October 2012.35 Peter Dinham, ‘OTT goes over the top’, Comms Wire, 6 June 2013.36 mobile squared, OTT Services Blow Up the Mobile Universe. Operators Must Act NOW! September 2013.37 ibid.38 Jason Ankeny, ‘SMS traffic and revenues decline for the first time ever in the U.S., Chetan Sharma says,’ FierceMobileIT, 12 November 12, 2012.