One Billion Smartphone Users by 2016, Forrester Says

The adoption rate would create a $56 billion market for mobile apps and major new opportunities for retailers

   

Global smartphone and tablet usage increases since 2007 have spawned a booming mobile application market that has led to the creation of 500,000 related jobs in the United States, according to a new study from Forrester Research, and that sector is set for another expansion.

Forrester predicts that 1 billion people worldwide will own smartphones by 2016. In addition, consumer spending on mobile applications is expected to hit $56 billion that year, creating an enormous earnings possibility for businesses with strong mobile development policies.

Creation of a strong mobile development policy requires businesses in the sector to take the process seriously, notes Forrester, which recommends installing a chief mobility officer to oversee the required technological architecture, application planning, and security issues. Consumers won’t accept a mobile product that they don’t value and trust.

The companies leading the way

Forrester points to the success of retail pharmacy giant Walgreen’s (NYSE:WAG) current mobile strategy. A Walgreen application that creates an easy method for customers to refill prescriptions and make purchases has increased transactions by 25% in less than a year. The application is successful because it focuses on customers’ needs rather than on the products they’re buying.

Multifaceted applications will likely experience the largest growth. Mobile technologies such as near-field communications (NFC) and GPS can be utilized to adapt an application to a consumer’s current need. An application available to Wal-Mart (NYSE:WMT) customers, for example, could sense through a device’s GPS when a consumer has entered the store and text special coupons valid only for a short time.

The customer can purchase the product, with discount, at the register and swipe the NFC-enabled smartphone to complete payment. The idea is to present the customer with potentially helpful information in a timely manner without it seeming like an aggressive marketing tactic.

A competitive app market

Application development will also need to focus on multiple platforms. Forrester predicts strong competition between Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG), and Microsoft (NASDAQ:MSFT)—the three companies that drive adoption in 90% of the tablet and smartphone market. Of the 350 million business users expected, 33% will carry a personal smartphone to use at work, meaning that all platforms are fair game.

A vast majority of mobile device developments in the past six months have shown that mobile development is becoming increasingly important to these three tech companies. Microsoft’s Windows 8 operating system was developed with touchscreen mobile devices in mind. Google has turned to NFC for mobile payments and has begun attempts to raise the quality of offerings available in its app store, though both efforts still need improvement. Research in Motion (NASDAQ:RIMM) has focused renewed attention on BlackBerry’s application offerings.

Increased revenue from application sales will also benefit providers of ancillary services. This could include the cloud storage servers that smaller business can use as part of their app-services architecture. Google and Amazon will likely dominate in that category. Also expect to see an influx of startup companies offering application development help for companies that are struggling to establish themselves in the mobile-services ecosystem.


Article printed from InvestorPlace Media, http://investorplace.com/2012/02/one-billion-smartphone-users-by-2016-forrester-says-aapl-msft-goog/.

©2014 InvestorPlace Media, LLC

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