Smartphone app developers are striking gold

GOLD Rush. It&rsquo;s not a phrase you hear much these days, but that&rsquo;s how research firm Yankee described the market for smartphone apps earlier this week. Its analysts estimate that the US market will be worth some $4.2bn (&pound;2.6bn) by the end of 2013 &ndash; over 10 times higher than the $343m it is expected to pull in this year. <br /><br />It is Apple&rsquo;s app store, which partners with its phenomenally successful iPhone and iPod Touch, that we should thank for the craze. When it opened its virtual doors last year, it completely revolutionised the software market. In the first month, consumers downloaded 60m apps, netting the third party developers that tout their wares on the site $21m.<br /><br />By the start of this month, a staggering 1.8bn apps had been downloaded from a choice of around 75,000. According to Piper Jaffray, Apple will soon end up creating a profitable market place that generates revenues of $1bn a year &ndash; although the vast majority of that will go to the developers themselves, who take a 70 per cent cut. Obviously, BlackBerry, Nokia, and other handset makers have scrambled to catch up, although none have produced a product to rival Apple. <br /><br />Currently, the price for an app averages around $1.95, but Yankee says this will increase to $2.37 by the end of 2013, making margins for developers look increasingly attractive. The cost of the developing these often simple products &ndash; which have more in common with 1980s hits like Space Invaders and Pac Man than fully-featured video games &ndash; are also generally quite low. <br /><br />Earlier this month, Capcom released an app based on the hit TV show Who Wants to be a Millionaire, but you&rsquo;ve more chance of becoming one by developing an app yourself. In April 2007, Steve Demeter began developing Trism, a simple game which is similar to Tetris. Two months later, he had booked profits of $250,000 and quit his job writing software for a large bank. By the end of July, he was estimated to have made around $2m.<br /><br />Although a huge number of &ndash; mostly bad &ndash; apps are free, consumers are willing to pay for the good ones. Unlike the web, we have always associated our mobile phones with micropayments of some sort, whether we&rsquo;re coughing up for calls, text messages or ring tones. That link has proven remarkably resilient, even as we have got used to more and more free content. <br /><br />For budding app entrepreneurs, Yankee has some advice. Developers working on the iPhone should focus on business-orientated apps while BlackBerry authors should chase the consumer space, as there are still significant gaps in the market in these areas. It might be worth a punt &ndash; there aren&rsquo;t many gold rushes worth chasing right now. <br />&nbsp;&nbsp;&nbsp;<br />