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Report: Apps industry surging to $25 billion

By Kevin Voigt, CNN
March 5, 2013 -- Updated 1037 GMT (1837 HKT)
STORY HIGHLIGHTS
  • The global app industry will grow to $25 billion in 2013, Gartner Inc. projects
  • Comes as sales of smartphones are projected to eclipse feature phones for the first time
  • Last month, China became the top market for Android and Apple iOS smartphones and tablets
  • Smartphone users in the U.S. now spend more than two hours a day using apps

(CNN) -- In 2007, at the dawn of the app market, few would have predicted the industry would soon become a billion dollar business. But thanks to the popularity of Apple's iPhone, Google's Android and other smartphone platforms, the app business is booming.

Mobile phone apps are expected to generate $25 billion in worldwide sales in 2013, up 62% from last year, according to new research from Gartner Inc. The study was first reported by the Wall Street Journal Monday.

The exponential growth mirrors that of smartphones -- for the first time this year, more smartphones are forecast to be shipped globally than feature phones, according to a report released Monday by IDC, the technology market research firm.

IDC projects that vendors will ship 919 million smartphones this year -- 50.1% of total mobile phone shipments. "Much of the world's smartphone shipments were a direct result of demand in mature economies such as the U.S.," IDC wrote. "The balance of smartphone demand is gradually shifting, however, to emerging markets where smartphone user bases are still relatively small and economic prospects are considerably higher."

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China is leading the charge in the developing world, passing the U.S. last month to become the world's top country for Android and Apple iOS smartphones and tablets, according to Flurry Inc., a mobile analytics firm.

That's helping to feed the app frenzy. Apple and Google now have more than 700,000 apps in their respective app stores. The time people spend using apps is growing, too. From December 2011 to December 2012, time spent by app users in the U.S. grew from 94 minutes to 127 minutes a day, according to Flurry.

The new "app economy" has created about 466,000 jobs in the U.S. from 2007 to 2012, according to a study last year by TechNet.

But the explosion of smartphone applications will likely decrease the odds for bedroom developers dreaming of app riches. "You do still see the success stories but they are fewer and farther between," Mashable's Christine Warren told CNN.

"A lot of it has to do with luck," she said. "Having a well-designed app, an app that works well with mobile so it takes advantage of the camera, it takes advantage of geolocation features, it can connect in with other apps and services -- that goes a long way.

Catching the attention of the right websites and "staying in the top 10, top 50 of the best selling list goes a long way toward long-term success," she said.

CNN's Andrew Stevens contributed to this report.

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