Most iPhone apps spurned after purchase

By Tom Krazit on 23 February 2009, 10:30am

Just 30 per cent of people who buy an iPhone application actually use it the day after it was purchased, according to Pinch Media, which analysed over 30 million downloads from Apple's App Store.

The numbers plunge from there: after 20 days, less than five per cent of those who have downloaded an application are actively using it. The drop-off is even greater for free applications.

Those are amazing numbers. It's not a new pattern -- GigaOM and TechCrunch noticed this last August -- but, back then, with the App Store just a month old, it was hard to know whether that usage model would last.

Now it's clear that seven months, 15,000 applications and 500 million downloads later, things haven't changed. App Store activity continues to be huge. Apple has made the App Store the centerpiece of its iPhone marketing strategy over the last few months, highlighting the breadth and depth of applications that are available for business and entertainment.

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But, if most people don't find iPhone applications very compelling, does it matter how many exist? It's enough to make you wonder if the App Store is starting to become saturated.

Pinch Media chief executive Greg Yardley looks at it a little differently. In his view, Apple has built such an easy-to-use distribution (as well as payment-processing) platform for iPhone applications that people find it very easy to move onto the next thing that catches their fancy. The lack of a try-before-you-buy feature means iPhone users have no choice but to take the plunge, and, given that most iPhone applications are free and the ones that do cost money are inexpensive, there's little incentive to carefully shop around for the one application that best meets your needs.

Only about ten per cent of iPhone applications appear to retain an audience over time, and most of those are games, entertainment applications such as movie listings, or apps like Facebook.

But developers are still making plenty of money from the other 90 per cent, Yardley said. As noted, people are very willing to try new iPhone applications, meaning that building a better mousetrap is still a very viable business model for the world of mobile computing. His advice for developers was to get their money up front, and charge something for their application rather than trying to depend on a free/ad-subsidised model, because the number of people viewing those ads will plummet the day after the application lands on their iPhones.

At some point, however, Apple will need to find a better way to help developers promote their applications within an ocean of rivals. "The App Store fails as a promotional mechanism. There's only so much screen real estate," Yardley said. If you don't get on the 'Top 100' or 'Staff Favorites' lists, your application languishes.

Yardley said he thinks there is still a great deal of opportunity for developers on the App Store, which isn't that surprising, given that he makes his living by advising iPhone developers. And it's true that, if the installed base of iPhones continues to grow, there will be more and more niche opportunities to cater to the needs of high-school students and the elderly, and everyone in between.

Still, how many more currency conversion (37), recipe (67), and fart-joke (30) applications do iPhone users really need, especially if they aren't using the ones they've already got?