Watching their investment and retirement portfolios shrink and facing the recession has not stopped mobile-phone users from spending big on apps. More than 15 percent of 235 smartphone users who installed apps on their devices last year spent nearly $100. And 16.5 percent spent between $100 and $500 in the last 12 months.
ABI Research, which conducted the survey, found that iPhone users aren’t holding back when it comes to buying low-cost apps from Apple’s App Store.
“That’s significant,” said Jeff Orr, senior analyst for mobile content for ABI. “Given the unrest in the economy, I’m a bit surprised to see that mark hit when it did. I would not have expected it in 2008. Single digits was more my expectation.”
“This is the first time in the mobile market where people are spending more on the applications than they are on the device and arguably the service,” Orr said.
Prices for apps in the App Store ranging from $1 to $25, but mostly on the lower end, are the core of ABI’s study. Once Apple is taken out of the app equation, however, costs for applications run $7 to $25 each, according to Orr.
Apple is somewhat hurting the market with its App Store because it’s driving down prices, according to Orr.
“I don’t think it was ever Apple’s intent to see prices go to that level; it was a side effect from using the model of iTunes,” Orr said. “It has driven developers to compete. How many types of a particular application can there be before you have saturation, and what other way to compete than price? I expect this year one of their motivations will be to try to reverse that trend and encourage developers to price products based on what the markets will bear.”
He said…