Escalating Smartphone Sales Means Slowing App Sales

A year ago, according to Nielsen, smartphone purchases made up 38% of all cell phone purchases in the US. Now it is 50%. This means the market is quickly approaching a saturation point. The speed of saturation should be particularly troubling for software developers.

The reality is that most people don’t spend their time looking for new software apps to install on their devices. Especially in productivity, most download a handful of apps that they use all the time and that’s it. The best time to get a customer to look at new products is when they first buy into a platform, and that is usually when they first buy a smartphone. As the rate of new adoptions drop over the next few years, I believe that app sales will drop, at least for the kinds of general purpose apps that currently saturate the app stores.

Does that mean there won’t be break out hits? Of course not. There is still plenty of room for new entrants to make sales, but I do mean for every general purpose calculator, task list, photo and weather app, US-based sales are soon going to decrease and fall off as the demand from new customers decreases. Marketing is going to matter a lot more than it has.

How do we combat this trend? Here are a few off the top of my head:

  • Focus on a vertical market
  • Focus in a software area where there tend to be a desire to find new things (i.e., games)
  • Focus on providing additional capabilities, features and apps to your existing customers
  • Focus on International markets
  • Focus on unique products that weren’t possible before everyone had computers in their pockets

This isn’t dire. There is plenty of opportunity out there and lots of amazing opportunities that weren’t available before everyone carried a computer in their pockets. But if we thought the smartphone gold rush slowed a couple of years ago, well, I don’t think we’ve seen anything yet.