Slow global rollout, lack of tablets responsible for Windows Phone’s ‘frustratingly low’ app sales: ABI

Despite significant gains over the past year, Microsoft’s Windows Phone platform is still dragging its feet behind rival smartphone platforms in terms of both market share and application downloads.

Market analyst ABI Research forecasts that the Windows Platform will account for just 2 percent of the close to 36 billion apps downloaded on smartphones in 2012. Comparatively, devices running Android and iOS will make up 86 percent of all app downloads for the year.

“Although Windows Phone lags behind RIM’s BlackBerry and even Nokia’s Symbian, we shouldn’t ignore the fact that the two percent that we forecast for 2012 would be twice the share the platform achieved last year,” said ABI research associate Lim Shiyang. “Microsoft is gaining momentum, but its starting point is frustratingly low. Contrary to popular belief, this isn’t really a chicken-and-egg problem of low device sales holding back the app business and the slow app business holding back the device sales. It’s more complicated than that.”

Low device sales are hurting app downloads on the Windows Phone (WP) platform but there are other factors at play too. Microsoft has taken a long time to roll out its Windows Marketplace app store on the global scale and has been slow to launch in-app payments -- one of the major drivers for app monetization and a model that has proven popular with consumers.  

App store tracker Distimo believes that the freemium app business model (where applications are free to download but include in-app purchases for extra features) is one of the most important monetization strategies.

In its end of year report for 2011 Distimo said that, “[h]alf of the revenue of the 200 top grossing apps in the Apple App Store for iPhone is now generated by freemium apps. This proportion is even higher in the Google Android Market where 65% of the revenue from the top grossing apps is generated by freemium apps.”

Without in-app purchases quality applications remain behind an upfront paywall, which has proven to be a deterrent to WP users said ABI.

To date, there are no commercially available tablets running the Windows Phone platform, but their arrival in the market should have a positive impact on global WP app downloads.

“The arrival of the first Windows 8 tablets, as well as Windows Phone’s upgrade to the Apollo iteration, should also give [WP app downloads] a boost,” said ABI senior analyst Aapo Markkanen, “since developers can reuse their code to launch on various screen sizes.”

In February 2012 Distimo reported that the Windows Phone 7 Marketplace exceeded a milestone of 60,000 active applications worldwide. In the same month, the WP7 Marketplace overtook RIM’s BlackBerry App World in terms of available applications.