App-driven mobile computing has created an unprecedented value so far, and will get even bigger as the people can no longer live without their ‘smart’ mobile devices. A report by GP Bullhound, a tech investment banking company, underlines that the mobile service providers will continue to shape the economy across the globe as long as they are able to stay relevant, cultivate large active user bases and convert their user relationships into money. However, this unprecedented growth also risks harming the competition by shutting a territory to new comers.
According to the report titled The New “Mobile App Reality”: Unprecedented Value Creation Opportunity, app stores are now the number one shopping destination worldwide. The arrival of first major application store – Apple App Store – six years ago, has produced a never-ending seismic shift in consumer behavior.
Ali Dagli, director at GP Bullhound and one of the writers of the report, says: “Messaging app WhatsApp has more than 500M users. Freemium game Puzzle & Dragons made $1.5bn in revenues and $900m in EBITDA in 2013. All solely on iOS and Android. These numbers are unprecedented. Create a great service and the consumers of the world will come in droves. Given the scale of reward, the mobile app space is crowded, and it has its share of challenges. For those who step up, however, the global value creation opportunity has never been bigger.”
The mobile app ecosystem also face serious challenges according to GPBullhound. It says it’s much more likely today that big and established players outbid competition by owning a territory. Freemium model is another risk as it lowers CPM rates on ads. Privacy and safety concerns related to personal data, and device, platform and app store fragmentation (e.g. Android, China) are among other problems that an app ecosystem should seek solution to.
GP Bullhound is an international technology investment banking group with offices in London, San Francisco, Stockholm, Berlin and Manchester. They provide advice on mergers and acquisitions, private/public placement, research and asset management to corporate clients and investors. You can see the full report below.