March App Store Report: Have We Peaked?

This month’s WIP App Store Report, a PDF version of our App Store Catalog, is out. Grab the download for a summary of information on the app stores in the catalog, and some added analysis. This month, we wonder if the growth in the number of app stores has peaked.

You might have noticed some of the big news from the mobile industry during February: Nokia’s new partnership with Micro- soft, or perhaps something from the big Mobile World Congress confab in Barcelona. But you probably didn’t notice another significant piece of news: the number of stores in the WIP App Store Catalog held steady at 113.

Journalists are taught in school that things that don’t happen aren’t news; that’s not the case here. Given the torrid growth of the number of stores in 2010, the fact that just 3 have been added so far in 2011, and none in February is quite significant. Particularly when one considers MWC — a flashpoint of industry product and service launches — took place in the month.

The chart below is an update to our chart from the July 2010 App Store report, which plotted store launches over time. The blue bars show launches during the time periods on the left; the red bar illustrates the overall number of stores. While we must wait a few more months before having an equal comparison on the chart, at the current pace, just 9 app stores will be added in the first half of the year, a level not seen since the first half of 2009. The question then is, has the app store market peaked, at least in terms of number of stores?

Clearly the momentum of new store launches has slowed; anecdotally we are hearing stories about some stores being on the brink of closure. This is hardly unexpected, as the skyrocketing growth experienced here over the last two years was hardly sustainable. What’s next? The shakeout. The stores that can’t drive sufficient volume for developers, either through sheer number of users or through niche appeal, will fall by the wayside.

Developers, too are playing a role in this, in addition to users. The demands of submitting to multiple stores remain onerous, with developers hesitant to spend time submitting to stores that don’t offer clear and immediate benefit. This starts a death cycle for those stores, as their lack of the latest and best apps drives away users. The growth in overall numbers has likely peaked, what’s not yet clear is how quickly that number will contract.

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