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Mobile application buyers spend big

17 percent of mobile app buyers spend over $100

A survey of US smartphone users who installed applications on their mobile devices in 2008 reveals that a surprising 16.5 percent spent between $100 and $499. That level of spending is especially significant given the low cost of most mobile applications, ranging from as little as a dollar or two at Apple's iPhone App Store, to at most about $25.

The Mobile Application Storefronts survey of 235 smartphone users was conducted by ABI Research in November.The survey of 236 smartphone users was conducted by ABI Research in November.

Those low App Store prices are one of the contentious issues discussed in a new global ABI Research study of mobile application storefronts.

iPhone mobile app store

"Apple is seen by some as hurting the market with its iPhone App Store," says senior analyst Jeff Orr. "It drives the price of content down to $1-2, using a model similar to its successful iTunes music store. If you exclude Apple from the mix, applications for other platforms cost about $7-25 each."

Many developers, lacking the resources to author applications for all available smartphone platforms, have to focus on one. That means they have a "margin vs volume" quandary: sell many copies for the iPhone at a very low price of which the developer receives 70 percent, or sell fewer via one of the other application storefronts, but charge a higher price and earn more per transaction.

"On the other hand," says Orr, "Apple did a lot for the market with its massive marketing effort telling the public how great mobile content is.

"That created a ‘halo' effect for the rest of the industry: other device manufacturers and content developers working on non-Apple platforms all saw a bump in sales and downloads because there's more awareness of the smartphone category. Running alongside apps for the Apple iPhone, in 2009 a number of new mobile application storefronts will be launched from Microsoft, Nokia, Palm, RIM and Samsung."

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