Fierce Competition in the Apps Industry

While the apps industry continues to grow, that growth is due to the success of a small percentage of apps.  Apple’s App Store offers over 800,000 apps, but only 80 of those- or 1 out of every 10,000- generated more than $1 million in revenue in the fourth quarter of 2012.  With thousands of new apps appearing every month, developers are under tremendous time pressure to bring an app to market before competitors beat them to the punch.  In addition, an app developer can be placed at an insurmountable disadvantage if it competes against another developer who is backed with funding and marketing know-how by established players in the industry.

While the cost of developing apps is often low, the low barriers to entry and the fierce competition mean that most app developers never realize their business goals.  The example of the app Spork provides a cautionary tale for entrepreneurs.  It allowed users to review dishes at restaurants, but ultimately failed because of a lack of funding and marketing.  But the concept was sound; rival Foodspotting was acquired for $10 million earlier this year.

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