The growing importance of apps to Europe’s economy is the subject of a new report which estimates that the 28 European Union member states account for more than a fifth (22%) of the global production of app-related products & services, and a quarter of global app consumption. The app report is based on VisionMobile’s Q3 2013 Developer Economics global survey conducted from April to May 2013 (which polled more than 6,000 “stakeholders” across the app ecosystem including developers, designers CTOs, management and hobbyists).
The report does not break out rates of consumption by EU country but says there is “high variability across nations”, with Western European states unsurprisingly leading on smartphone adoption and app consumption. “The widest gap exists across the East-West axis, with Western Europe having the highest adoption of smartphones and the highest exposure to app-related products and services,” the report notes on app consumption across the region.
This tallies with data from Flurry from February looking at app consumption globally. Flurry flagged up the 30 heaviest app using countries worldwide and the sub-set of European nations falling into that heavy app user category were the U.K., the Netherlands, Sweden, Denmark, Germany, France, Italy and Spain.
In a speech yesterday, referencing the app economy report, EC Commissioner Neelie Kroes described the EU as “holding its own” when it comes to app production, coming in second globally after North America — which continues to dominate app production and consumption. That said, data from mobile analytics firm Flurry last month, suggested the U.S.’s app making lead is shrinking — with just 36% of the 350,000 mobile apps Flurry tracks being made in the U.S. in 2013 vs 45% in 2012.
“The global App Economy is likely to grow at a faster rate than EU28 due to the rapid adoption of smartphones in the massive markets of Asia, Latin America and even Africa, which in turn creates significant demand and opportunities in these markets,” the EU app economy report notes.
According to the report, app-related products and services revenues in the EU28 hit €10.2 billion in 2012. It estimates they will rise to €11.2 billion this year, accounting for just over a fifth (22%) of the global market. By 2016 the EU28 app economy is projected to have grown to €14.9 billion.
The report also breaks down projected global app-related products and services revenues — estimated to hit €51 billion/$67 billion in total this year — into the following sources, including a €9.1 billion app store sales portion, and €3.7 billion for in-app advertising:
As you might expect, the vast majority (82%) of app revenues occur outside app stores, with contracted services (i.e. developers building apps) dominating app-related revenue creation.
In terms of jobs, the report estimates there are currently 529,000 people in the EU28 who are directly linked to the App Economy and in full time employment. This includes 330,000 developers and another 199,000 in other roles such as management, design and marketing. Factoring in the spill over effect apps and app-related services have on wider employment bumps the jobs figure even higher, with a “conservative” estimate that the apps economy contributes an additional 265,000 jobs — making a total of 794,000 across the whole economy. A further 180,000 people are estimated to be involved in the app economy on a part-time or hobbyist/enthusiast basis.
The majority (62%) of the people directly involved in the app economy are developers, according to the report, with CIOs, CTOs and IT managers account collectively accounting for 12%. “The ratio of non-developers to developers, currently at 1 non-developer for every 1.6 developers, may grow as startups become more business-oriented and seek to bring their products to market,” it notes.
On the devices side, as of this year, smartphone adoption among mobile users in the EU is around 50% — and growing at around 10% per annum, according to the report.
The report also includes some interesting country specific stats for the U.K., Germany and France — which shows the U.K. leading the trio on smartphone penetration, Internet access on mobile and total app downloads:
Finally, the report notes that areas where Europe needs to do more to help foster higher levels of growth in its app economy and bolster its global competitiveness include labour market flexibility; rolling out LTE/4G mobile connectivity to upgrade to faster mobile networks (an area it is lagging behind other regions); and being more agile in policy making to ensure regulatory frameworks keep pace with mobile innovations (for example in an area such as peer-to-peer sharing in relation to transport, finance and accommodation).
On the networks point, the EC has been pushing an agenda of unifying European telecoms networks to try to break down fragmentation and speed up infrastructure rollouts. In her speech yesterday Kroes indicated she would release a package of measures on this next week, noting: “I will be coming forward with a package to help us create that connected continent. To bring down the barriers that mean communications stop at borders. Taking away red tape and constraints that keep telecoms companies boxed into tiny national markets; limiting their ambition and limiting consumer choice. Turning European telecommunications into a dynamic, unified single market. Delivering connectivity for all: the fast, reliable, pan-European networks that can underpin pan-European services, and a vibrant app economy too.”