The app market seemed like the opportunity of the decade, but actually isn’t all that reminiscent of the dotcom boom, or the free-for-all business opportunity it appeared to be. (Original Article)

The abundance of free apps make consumers hesitant to pay, and firms must seek other revenue streams such as in-app purchases or advertisements. Yet, it has benefited for existing firms strengthen customer relationships, such as Cosmopolitan expanding e-subscription.

Current market is saturated with both independent developers and corporations, creating a fragmented market. As measured with Porter’s Five Forces, this industry is extremely competitive. Not just that, each app is threatened with substitutes outside of app market as well; note-taking apps with traditional notebooks, apps for text files with dedicated ebook readers.

This contrasts to markets like smartphones, with high entry barriers (technology patents, high entry costs) that have clear leaders as Christopher elaborates. In Patricia’s post about airlines, individual customers have much buyer power, but also high switching costs. Thus, they are more likely to remain loyal to one firm. In the app market, switching happens almost instantaneously, and the intuitive interface makes learning curve for the new app momentous.

Gartner forecasts that app market downloads will grow, but along with the percentage of free app downloads, creating worries about slow growth in revenue compared to growth in volume.