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Gartner Says Application Development Is a $9 Billion Industry

Posted by timothy on from the give-or-take-59-cents dept.

CowboyRobot writes "Although not as lucrative as video games or movies, Gartner projects the software application development industry will pass the US$9 Billion mark this year. They credit 'evolving software delivery models, new development methodologies, emerging mobile application development, and open source software.' Also in the report is a projection that 'mobile application development projects targeting smartphones and tablets will outnumber native PC projects by a ratio of 4:1 by 2015.'"

65 comments

  1. Of course you have to subtract legal expenses by Anonymous Coward · · Score: 1

    Otherwise that amount would already be well over 10 billion

    1. Re:Of course you have to subtract legal expenses by an+unsound+mind · · Score: 1

      And you have to remember that piracy is a major factor.

      Otherwise software development would be a $180 billion industry.

  2. Is that all? by viperidaenz · · Score: 5, Insightful

    My backwater country spends hundreds of millions every year on enterprise software development (which is guess is a part of application development?).With only $145M GDP and 4.4M people, how can we be a significant (significant being measured in %, not ppm) part of the worldwide market?

    1. Re:Is that all? by Anonymous Coward · · Score: 0

      Your country spends several times the GDP on enterprise software development?

    2. Re:Is that all? by Anonymous Coward · · Score: 0

      Poorest country in the world? With 32$ per capita per year ?

      Why are you spending your entire GDP on software?

    3. Re:Is that all? by outsider007 · · Score: 1

      You can't because google only allows US and European citizens to sell their apps in their market.

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    4. Re:Is that all? by Anonymous Coward · · Score: 0

      Omg how full of shit can you be...

    5. Re:Is that all? by jellomizer · · Score: 2

      From Wikipedia.

      GDP = private consumption + gross investment + government spending + (exports imports)

      Software development is part of gross investments and perhaps imports.

      Now what happens with software development they will deprecate the cost over years, so that is 100 million over 5 years. So it would account for 20 million every year. And if you import software from the US then that number effecting you GDP will go down.

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    6. Re:Is that all? by Anonymous Coward · · Score: 0

      What's with all these people talking out of their asses and getting modded up for it?

    7. Re:Is that all? by Rockoon · · Score: 1

      Beats the hell out of me.. I'm still trying to figure out how GDP could ever be less than any expenditures. That guys +5 now.... amazing.

      --
      "His name was James Damore."
    8. Re:Is that all? by Anonymous Coward · · Score: 1

      The mods at ./ have been on crack for quite a while. It isn't just this. Look in almost any major discussion and people are getting modded up for posting complete bullshit that's easily and objectively proven as wrong.

      But they'll mod down to -1 perfectly accurate things that they don't like.

    9. Re:Is that all? by Chris+Mattern · · Score: 1

      $145 million GDP and a population of 4.4 million means an annual income per capita of $33. The Democratic Republic of the Congo, the world's poorest nation, has a figure more than ten times that. I think he meant to say $145 *billion* GDP. I believe he may be from New Zealand; I can't make the figures match up precisely, but it's close. He may have difference sources.

    10. Re:Is that all? by __aaltlg1547 · · Score: 1

      It can be less than expenditures if you export. Say your worthy country has just one industry: making and exporting software. If you paid your staff 40% of gross receipts, paid 10% in taxes and operating expenses you've got 50% left in profit. As I said, the country has only one industry, so you import everything the citizens consume. That subtracts from GDP. Stash the rest of your of the money in offshore accounts. Voila!

    11. Re:Is that all? by similar_name · · Score: 1

      Can you share which country that is? I'm just curious and I can't find any countries that match your numbers. If you don't want to say specifically can you check/update your numbers?

    12. Re:Is that all? by gl4ss · · Score: 1

      I'm guessing that 9 Billion is actually "mobile applications" and not Programs, you know, "apps". the bullshit lingo.

      because if it really were applications as what are programs, enterprise data editing and all that.. then it's pretty fucking strange that oracle did 35 billion in revenue in 2011 if apps are just a 9 billion dollar business..

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    13. Re:Is that all? by jellomizer · · Score: 1

      The GDP isn't a measure of income.

      --
      If something is so important that you feel the need to post it on the internet... It probably isn't that important.
    14. Re:Is that all? by viperidaenz · · Score: 1

      Opps. I meant $145B. It's New Zealand.
      I was only 3 zeros off.

    15. Re:Is that all? by viperidaenz · · Score: 1

      You're correct. It was $145,000,000,000. You get a gold star

    16. Re:Is that all? by Anonymous Coward · · Score: 0

      (make productive utility tools)

  3. What is "application development"...? by Half-pint+HAL · · Score: 4, Insightful

    Nothing in the article makes a solid distinction between "video games" and "application software", and there's a danger that the bundling of games into "app stores" such as Apple's clouds the figures. The phrase "emerging mobile application development" kind of makes me worried here. Certainly app stores like big headline figures, so their reporting won't always make that distinction, and a lot of leisure software isn't really "games".

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    1. Re:What is "application development"...? by Solandri · · Score: 1

      Adobe alone is $4.5 billion, and Microsoft is $73 billion annually. So I'm pretty sure the $9 billion is only for mobile applications. It's still peanuts compared to PC software, and will be until you can put business-grade software on a phone/tablet.

  4. Mostly mobile apps by Anonymous Coward · · Score: 0

    [quote]mobile application development projects targeting smartphones and tablets will outnumber native PC projects by a ratio of 4:1 by 2015.[/quote]

    So what they're saying is by 2015 application development will be 3/4 fluff with no real economic purpose.

    1. Re:Mostly mobile apps by symbolset · · Score: 1

      Getting the app customer's money, or the sponsor's money for ad-laden freeware, is always a real economic purpose.

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  5. Mostly following the money. by Ostracus · · Score: 2

    mobile application development projects targeting smartphones and tablets will outnumber native PC projects by a ratio of 4:1 by 2015.

    So what they're saying is by 2015 application development will be 3/4 fluff with no real economic purpose.

    No, they're saying with the growing importance of those respective platforms, developers will follow the money.

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    1. Re:Mostly following the money. by Kjella · · Score: 1

      No, they're saying with the growing importance of those respective platforms, developers will follow the money.

      Not to mention
      a) Margins. If you're early on tablets, you can probably make a nice profit before the competition shows up
      b) Market share. If a competitor dominates the PC, now's your chance to grab the mobile market.
      c) Novelty. With a new interface you have a chance to make something that hasn't been done before.
      d) Efficient mini-payment structure that makes $1 applications viable, which is easier for small devs.

      And yes, people are really going tablet crazy... I just recently read an article about how they were flying off the shelves, there was this guy interviewed and he had one, his wife had one and now he was there to buy one for his kids - each. Most people are consumers and as a consumption device it's a runaway hit. So with a frenzy of new consumers who want apps for their new tablet, yeah I think Gartner for once is right (hey, they can't be wrong every time... accidents happen).

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    2. Re:Mostly following the money. by Anonymous Coward · · Score: 0

      Tablets are on track to surpass sales of traditional form factor PCs (notebooks, netbooks, and desktops) by late 2013 or early 2014.

      The world is a-changin'. The company I work for has started porting our software to tablets and touch interfaces now for this reason, so we aren't left behind by the market shift. Some people are clinging to the hope that the PC industry won't die, and it surely won't die completely, but it will be much, much less important than it has been over the last few decades. All the money and new development is going to be in tablets.

      Here's an anecdotal data point to augment yours: Nobody I know under the age of 40 has bought a new PC in the last several years. When their old PCs die, they replace them with iPads. There's a reason Apple is now the most valuable company in the world, and traditional PC makers are suffering declining sales, and that's it right there. I know slashdot people don't like to believe this, but their world is not representative of the much, much wider world of non-technical people. Techies are still buying PCs, sure, but normal people aren't, and the techie market is minuscule compared compared to that far larger market.

    3. Re:Mostly following the money. by Anonymous Coward · · Score: 0

      a) Margins. Selling to bottom-end consumers was/is definitely a low margin game. It's only a matter of time - maybe not much at all - before the same dynamic materializes in the mobile market.

      b) Market share. Bottom-end consumers are an incredibly fickle bunch. Unless you're a megacorp, you can't/won't command a large market share of bottom-end consumers. Either you'll be bled to death or buried by a megacorp sooner rather than later.

      c) Novelty. Ok, sure. But that will follow the same patterns as margins and market share. Novelty in itself isn't very useful without a very significant barrier to entry for competitors. No such thing exists in the mobile space.

      d) Efficient mini-payment structures are not limited to the mobile space.

    4. Re:Mostly following the money. by __aaltlg1547 · · Score: 1

      Here's an anecdotal data point to augment yours: Nobody I know under the age of 40 has bought a new PC in the last several years. When their old PCs die, they replace them with iPads.

      You don't know any people in college or with kids in college, do you?

    5. Re:Mostly following the money. by hackula · · Score: 1

      Yeah, this is totally false. I am 23, with younger siblings ranging down to high school. No iPads among the 4 of us, while each of us have at least one laptop. I am the only techie of the bunch. I have one or two friends with an iPad, typically as a secondary "I had some money to throw away and though it would look cool on my coffee table" type device. Everyone else has a laptop because getting basic work done is easier on a PC. You really think your College math software is going to run on a tablet? Hell no, it won't even run on a mac and it barely runs on Windows, so you better be running Win7 or else. Ultrabooks could be taking over for a lot of users, but tablets are not going to take over the basic computing market anytime soon.

  6. So are they talking about by Compaqt · · Score: 2

    applications?

    or Apps(R)?

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    1. Re:So are they talking about by bakuun · · Score: 1

      It must be "apps", as in software for mobile devices. Last year, Microsoft alone had revenue of $ 74 billion. Granted, they do hardware and the like as well, but the 9 billion figure is still ridiculous if were to refer to all software development. Because of this, it is unfortunate that the summary says "software application development", whereas the articles only mentions "application development".

    2. Re:So are they talking about by Anonymous Coward · · Score: 0

      applications or apps? no, already old.
      they are probably thinking of this new thing called micro soft.

    3. Re:So are they talking about by Anonymous Coward · · Score: 0

      I read it as the cost of all software development. MS might have revenue of $74 billion, but I suspect they only spent a few $100 million on actual software development. Its cost of development, not the revenue from sales of resulting products, so $9 billion might not be far off the mark. On the other hand I doubt that it includes all those internal development projects that are for the internal support of the business.

    4. Re:So are they talking about by fa2k · · Score: 1

      It seems that they include PC applications from what I can read. This quote from Wikipedia was helpful to me, (the parent seems to know how an application is defined, but I didn't)

      Application software, [..] is computer software designed to help the user to perform specific tasks.
      [...]Application software is contrasted with system software and middleware, which manage and integrate a computer's capabilities, but typically do not directly apply in the performance of tasks that benefit the user.

      Most of windows isn't an application, but Office is. Is there really a difference between "application software"/ "software application" and just "application"?

    5. Re:So are they talking about by __aaltlg1547 · · Score: 1

      Also, Microsoft does operating systems, which are not counted as "applications" and services.

      Oracle, which does pretty much only applications, had sales around $37B.

      If mobile app development is at $9B it's still WAY behind desktop/laptop software sales.

      I think this is largely because sales are hampered by the platforms (iOS and Android). You buy through their markets, which are dominated by shitty apps that with very limited functionality that no users will pay for, which is why they're offered free and financed either by spyware functionality or annoying web ads or both. How much are you willing to pay for an application that you assume is probably crapware, compared to how much people regularly shell out for Photoshop or Microsoft Office or enterprise applications from Oracle?

      They're also hampered by the nature of the devices themselves. They're too small and not powerful enough for photo and video editing, have clumsy interfaces compared to even a laptop, are useless for coding and close to that for calculations. (You can barely work a spreadsheet on an iPad, let along a smart phone.) They have their uses, but the replacement for a laptop or a desktop computer, if you use them as general purpose computers and not ONLY as an ebook and portable web appliance, is another laptop or desktop computer.

  7. Cross platform potential by unixisc · · Score: 1

    Given all the platforms that exist out there - Windows, Apple, Linux, BSD, Unix and a myriad others, it looks like there is a rich set of target platforms to choose. And if ISVs did bundling arrangement of their software w/ various OSs out there, they could make some money on the sale of those platforms, while in the process enhancing the appeal of those platforms.

  8. smartphones and tablets will outnumber native PC by Anonymous Coward · · Score: 0

    "smartphones and tablets will outnumber native PC projects by a ratio of 4:1".

    Brrr...

  9. Really ... Gartner?! by Anonymous Coward · · Score: 5, Insightful

    This is Gartner: "saying what we're paid to say for over 20 years." Why is anything they say on slashdot?

    1. Re:Really ... Gartner?! by Tesen · · Score: 1

      That is what I am wondering. Gartner is paid for by their sponsers, yes the large software companies. Look at the changes in their top quadrant enterprise ETL packages over the last year or so. I have personal experience with a top right hand quadrant package they recommended end up now being dropped off a leader ETL solution. Any one that had done anything with the solution for day would have scoffed and demanded their money back.

  10. Re:smartphones and tablets will outnumber native P by Cenan · · Score: 1

    It's not that difficult to see why 4:1 might be about right, we currently have iOS, Android and Windows 8/Metro/Phone/Fail, that's 3 projects for one actual application once you start porting it to the other two.

    --
    ... whatever ...
  11. FB by udachny · · Score: 2, Insightful

    So some silly agency says: 9 Billion is what the software applications market is worth (for the year 2012), and FB was 'valued' at 100 billion or so. What a fucking ridiculous joke these planned economies are, the price discovery mechanism is so broken right now because of all the government interventions into the economies of the world. How can anybody know what prices are right now, with all this money being printed.

    9 Billion? How much of that is inflation, how much of that is efficiencies, how much of that is government contracts, how much of that is new platforms, what is this? If you read that 'article' you will see NOTHING.

    There is nothing there.

    --
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    1. Re:FB by gl4ss · · Score: 1

      the market is actually much higher than 9 billion. this 9 billion is just a subset of sw money paid by people to make sw. what subset? I guess if you buy the gartner report you'd know. shitty article.

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      world was created 5 seconds before this post as it is.
  12. The Land of the Free.... apps. by Tei · · Score: 1

    Angry Birds, the most popular paid app, its position 53. Its not even on the top 50. And since the market is horrible to discover new apps, apps neet a strong marketing. So this is a market of free apps with a strong marketing inversion. Not a market really atractive, I say.

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    1. Re:The Land of the Free.... apps. by Anonymous Coward · · Score: 0

      yeah the truth is most people do not make money on apps, most successful apps are side projects of already existing corporations who use their brand recognition to get downloads. truly independent app devs making a decent living are pretty miniscule.

    2. Re:The Land of the Free.... apps. by gbjbaanb · · Score: 1

      spot the MBA. Angry Birds is not even top 50, so therefore a complete waste of time, you must spend all your efforts trying to write a new Windows to maximise profitability.

      That Angry Birds cost less and made a ton of money is forgotten in the rush to fully leverage your development funding.

      You'll note the rest of the PC market is horrible to discover new apps, at least with the mobile app stores you reduce this dramatically as your app might show up in a search, whereas a PC app will never get discovered that way - marketing is always required for them.

    3. Re:The Land of the Free.... apps. by taxman_10m · · Score: 1

      Maybe with games. Just myself, I'll download new interesting games that Amazon makes a free app for the day even though they may not have too many reviews. But for apps I don't install anything that doesn't have a ton of reviews and high ratings. Those apps are mostly from well established names (usually affiliated with a well established website). I'm skeptical that it's easier for someone new to break in than with PC apps.

    4. Re:The Land of the Free.... apps. by taxman_10m · · Score: 2

      It strikes me that a lot of the apps I use (as opposed to mobile app versions of websites) are probably just holes that will eventually be filled by tablet manufacturers. Such as needing to download a file browser for my Nexus 7. How long before Google just includes one?

    5. Re:The Land of the Free.... apps. by gbjbaanb · · Score: 1

      compare the differences. Ignoring marketing, which should be even for both types - and depends on the pockets of the publisher, for a PC game you'd go to a website that lists the great new games this month and pick one. For a mobile app, you have the same kind of website but when you go to the app store to install it, you type in "great game" and you'll get a list of games with similar sounding names. Even when you install it, you'll also get a list of "what others installed" and "similar to this".

      So ultimately, the PC apps have less exposure overall to mobile ones, simply because of the way they're delivered. Now that doesn't mean a mobile app will suddenly be successful, just that it has a slightly better chance of more downloads.

      A new publisher is still going to have a hard time of course :(

  13. dont forget space aliens by Anonymous Coward · · Score: 0

    And you have to factor in space aliens an even bigger problem.

    Otherwise that software development number would be worth 1.8 trillion....

  14. Open source?? by swillden · · Score: 1

    But, pinko commie open source was going to kill the software industry and leave all of us software engineers starving. How could it actually contribute to the growth of the industry?

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    1. Re:Open source?? by __aaltlg1547 · · Score: 1

      But, pinko commie open source was going to kill the software industry and leave all of us software engineers starving. How could it actually contribute to the growth of the industry?

      From the article:

      "Open source software tools will continue to erode revenue for some AD categories in design, testing, and web development," said Mr. Raina. "This is being driven primarily by the success of Eclipse and NetBeans, as well as by overall revitalization of the market by new small software providers looking for technical and market-disruptive approaches for offering products. Limited budgets and economic conditions compelling enough to focus on cost reduction also fuel the use of open-source software in various development projects."

      It says open source is eroding revenue. That's consistent with the general trend of not doing good things for the revenue side of the software industry. Nobody said open source would stop development. It just is making it harder for a lot of companies to make money. But it's enabling different people to make money. It's not clear to me that they are by and large making money at it without violating at least the spirit if not the letter of the open-source licenses they're using.

    2. Re:Open source?? by swillden · · Score: 1

      Open source has eroded the market for commercial development tools -- but that never was a significant part of the overall market, and, as your quote even points out, this is largely because of the revitalization of the small software provider, meaning that free dev tools are contributing to the overall growth of the industry.

      It's not clear to me that they are by and large making money at it without violating at least the spirit if not the letter of the open-source licenses they're using.

      Cite? I can cite huge numbers of companies making massive amounts of money and fully complying with both spirit and letter. I can name a small handful of small players who violate the spirit. I can't think of anyone really getting away with violating the letter of the licenses.

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  15. 90% of this garbage is just porting by Anonymous Coward · · Score: 0

    ya know porting form some other app that existed or one that is on non mobile platforms...ergo unix....

  16. So the economy by Anonymous Coward · · Score: 0

    will be strong and healthy in 2015? This is good news!

  17. Amazon free app of the day... by Half-pint+HAL · · Score: 1

    Wonderful... except that Amazon's free app of the day scheme appears to generate no income at all for the application developer, as the promised x% of normal price is normally "negotiated" to zero. This actually tends to cost the app developer money in the long run, because they have to deal with support costs (and any server costs) exactly the same as with any paying customer. The Amazon free "customers" are also usually entitled to free upgrades, which leads to a free->paying conversion rate of practically nill. (If you have a second app for sale, you might be able to convince them to buy this one too.)

    --
    Got them moderator blues I blieve I walk out the do', With these mod-points I been gettin', I 'most never post no mo'
  18. C# by tepples · · Score: 1

    The iPhone runs Objective-C and standard C++. Android devices run Java and standard C++. So to target both, write the core application logic in standard C++ and platform-specific user interfaces in the platform's pet language. But Windows Phone currently supports only languages that compile to verifiably type-safe IL that does not use Emit, and that means C#. What kind of porting is possible other than a line-by-line rewrite by hand that introduces errors and doesn't allow changes to application logic to propagate from another platform?

    1. Re:C# by Anonymous Coward · · Score: 0

      monodroid and/or monotouch. Use whatever .net language you like, it compiles natively.

    2. Re:C# by tepples · · Score: 1

      monodroid and/or monotouch

      I've heard of them. They're priced out of the range of, say, hobbyists trying to build a CV in order to gain credibility to start a business.

  19. A third is malware ecosystem by symbolset · · Score: 1

    Malware, spyware, the defenses against same, the tools utilities and services for remediating that, the profits from various nefarious software schemes.

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  20. Re:smartphones and tablets will outnumber native P by hackula · · Score: 1

    Fart app clones will outnumber native PC projects by a ratio of 4:1".

    FTFY

  21. MODS! by Anonymous Coward · · Score: 0

    Sockpuppet account of romanmir.

    Downmod accordingly.

  22. sock puppet (and hypocrisy) alert! by Anonymous Coward · · Score: 0

    udachny is a sock puppet account of roman_mir. the same guy who openly supports oppression of the expression of ideas that he does not agree with is using this sock puppet because he was down moderated yesterday when using his regular account.

    the hypocrisy is delicious...

  23. $9 Billion industry by rastos1 · · Score: 1

    ... and all I got is this lousy T-shirt.