Virtual reality, IoT or humanoids are not the future and the real answer is far more boring
A fairly common trap within the tech industry is to get excited by the shiny new objects and declare them ‘the future’ or a revolutionary technology. While it might be true, the problem comes when we lose track of ‘old’ technologies.
This is not to suggest we become luddites and hang on to our beloved CD disk player. Rather, it is recognising our poor habit of moving on to the next great idea before the original (and often better) plan has gained traction.
In the age of Trump, we move from story-to-story so quickly that it prevents society from giving a particular event the consideration it deserves. Cambridge Analytica scandal? Old news (the story broke just over a month ago). The bitcoin bubble? Done and dusted. The public discussion about sexual harassment that took down Dave McClure (and others)? That happened less than a year ago. Might as well be ten.
Why I bring this up is because, seemingly since the moment they were invented, experts have declared we are moving beyond the app economy. The future lies in the investments made in virtual reality or IoT.
The app-assassinators are a now a long list, gathering dust in the trash heap of history. First it was Google Glass, then chatbots, now we have humanoid projects like Elon Musk’s Neuralink.
For some reason, we have been trying to kill apps for years, but data suggests that apps are far from disappearing. Actually, they don’t appear to have even hit the peak. Not even close.
Let’s look at the data
Here is a telling statistic: Global app usage is expected to see significant growth over the next five years but that number will be dwarfed by the growth of in-app spend.
App Annie, the mobile app research firm, projects that the world will see 258.2 billion downloads in 2022, which is a 45 per cent increase from 2017. By comparison, in-app spending is expected to jump by a whopping 92 per cent — from US$81.7 billion in 2017 to US$156.6 billion in 2022.
The reason for both gains is the projected 6.1 billion smartphones in the market, a 56 per cent growth from today’s number of 3.9 billion. If we take a projected 2022 world population of 7.9 billion, that means there will be 0.77 smartphones per person globally. In 2017, that number was 0.52.
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Furthermore, a lot of this growth is driven by Asia. APAC is expected to account for 72.4 per cent of all downloads and 64.8 per cent of in-app spend.
Additionally, the compound annually growth rate (CAGR) for downloads in Asia is projected at 10.3 per cent as compared to 1.2 per cent in the Americas. This is driven by countries like Vietnam and Indonesia but also China’s tier-3 cities and rural areas.
The CAGR for app-spend is more evenly spread with the Americas and EMEA expected to see equal growth:
- Americas: 14.3 per cent
- Asia: 13.7 per cent
- Europe/Middle East/Africa: 14.3 per cent
China and the US will lead the world in total in-app spend, but the real surprise is Japan coming in the third spot. The Japanese are expected to spend over US$140 per person on in-app purchases, making it the global leader by a large margin.
South Korea comes in fourth in total app spend but there is a significant drop between Japan and South Korea.
Takeaways from the data
For startups and investors alike, these numbers suggest that apps are here to stay and still provide an excellent avenue to start a solid business or ink nice returns on a portfolio.
However, it is important that companies adjust their strategies to fit their market.
If we look at India, it is the second-largest country for downloads but doesn’t crack the top-five in spend. This means for startups trying to target the Indian market, they may want to look at advertising as a revenue model instead of pursuing a freemium strategy.
Germany is the opposite. It doesn’t register as a large market for downloads, but Germans spend the fifth most inside their phones globally.
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All of these statistics are meant to point out a simple fact: The future of the startup economy is not virtual reality, IoT or humanoid integration.
The startup ecosystem needs too be mindful of becoming distracted by jingling keys or a sleek new product because we run the risk of missing the concrete trends driving the economy.
Over the short-to-medium term, the future of technology will still be written by our phones and the apps that make them revolutionary.
So make sure to keep riding the wave.
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Copyright: manganganath / 123RF Stock Photo
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