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Rise of app economy in India


Rewinding back to mid and the late 1990’s, almost every company had a website to reach their customers. Today the scene hasn’t changed much except for the transition from these cluttered websites to user-friendly mobile applications. The rise of mobile applications can be credited to the ease access that it offered to the customers. In today’s scenario, the need for a mobile based application is as great as it did for a website 20 years ago. Mobile based applications have furthered the extent to which technology can ease our life.

India in spite of still being addressed as a Developing Nation, we are the fourth largest app economy in the world with numbers speculating that app downloads may cross 20 billion by the year 2020. The facts do check with more people relying on apps more than websites. Statistics say that about 97% of users in India rely on these mobile applications over browsers and websites. Another interesting demographic suggests that about 25% of the population in India use ride-sharing applications such as Rapido, Uber, and the like for everyday commuting, putting India at first in the ride-sharing segment as compared to other countries across the globe.

Source: App Annie

A study of the above numbers reveals that the Apple App Store has more numbers when in terms of revenue whereas Google Play leads when it comes to downloads. As for revenue, iOS apps generated about $26billion, while Google Play apps generated $17billion in the last fiscal year.

In undeniable that apps have become an essential part of our daily lives. It lets one book a ride, order grocery, pay other people, recharge phones etc. with much ease. The ‘Make in India’ programme by the government of India also plays a vital role in boosting our app economy. Despite a looming unemployment problem, rising app economy in India is expected to provide around 1,00,000 employment opportunities in the current fiscal year of 2017-18. Estimates value of India’s app economy to be of Rs 2,000 crore having more than 3,00,000 developers across the country. Of which Bengaluru, Mumbai and Delhi having the maximum number of developers when compared to other cities.

You can see below how the search for the word ‘app’ in India has dramatically increased over the last year.

Source: Google

The major challenge that app developers in India face is monetizing their idea into a successful revenue. Incidentally, Most of the Apps listed on Google Play are free which mean developers earn major money through advertising. But in India, 60% of the total internet users hate Online Ads and the other 40 least bother about it. The current business model of applications in India is based on a hit & trial model.

The present revenue rate of apps in India is poor, which is one of the most crucial aspects where all entrepreneurs have a great concern for. Another huge challenge posting the industry is high customer acquisition cost. About 90% of customer acquisitions in India are discount-driven acquisitions & the average acquisition cost per customer is somewhere in the range of Rs. 80-120.

It’s interesting to see how the application industry in growing despite such harsh conditions. The big answer to look forward is how our app economy shall grow in the future with the current revenue models.


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