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App-building software is quickly reducing the market value of mobile apps
New York, NY (PRWEB) November 27, 2012
The mobile app development market, once projected to top out at $100 billion/year, may hit a plateau by the end of 2013 due to new and inexpensive app creation software, known as “app builders.” Online, mobile app builders such as AppGenerate and Sweb Apps have substantially reduced the high development costs of mobile apps, with some analysts predicting the average price to drop to $600 per application; which would roughly mirror the price decline in the website development market between 2004-2006, after the proliferation of the popular “website builder,” WordPress.
This new software allows users with no IT experience to develop mobile applications, which would otherwise have to be written in complex, programming languages. There are currently 2.3 billion, activated smartphones in the world and mobile applications account for nearly 84% of total use time for these devices.
The app industry is just under 6 years old and critical pricing information (such as Apple’s App Store requirements) is not easily accessed. Subsequently, the market has long refused to conform to traditional economic modeling and it was impossible for the average consumer to know how much labor programmers required to complete their requests for development. Prices varied wildly, with an estimated $87.4 billion lost in revenue amongst 98,400 firms from 2008-2011 due to inflated pricing. Popular online freelancing site, oDesk, reported their community of 70,000 app developers (13,000 of which are based in the US) estimate an average of 45-540 hours of labor for mobile app proposals, the largest such estimate range on the site; nearly 17 times larger than the average estimate range for website development projects.
The recent proliferation of app building software underpins a suspicion that a once-promising market may now suddenly contract. MBA students at the Wharton School of Business recently published a paper predicting that automations in the mobile app space will lead to a loss of revenue and jobs for firms offering app development services, especially in the West and Northeast regions of the US. Cities that are expected to be hit the hardest are San Francisco, San Jose, and Boulder. It is estimated that US firms will shed 3.4% of their app developer positions between 2013-2015.
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