U.S. Losing Ground In Mobile App Market

If mobile apps are the post-PC era’s software industry, the U.S. may be losing its edge. According to new findings mobile analytics firm Flurry released this morning, the U.S. isn’t leading in the creation of mobile applications, having slipped from 45 percent of worldwide app market share in 2011, to 36 percent in 2013, in terms of where apps are being built. Positioned against what the software industry looked like in 2008, where U.S. businesses produced around 68 percent of software units sold, it’s clear that the mobile app industry is one that’s becoming truly global in nature.

The U.S. app market does have something going for it, however – the apps it puts out are more engaging, and include more users, the report also found. When weighing apps by total time, taking into account user numbers and engagement, the U.S. still leads, though its percentage here as well has dropped from 75 percent to 70 percent from 2011 to 2013.

In addition, the picture changes somewhat when apps are examined by where they’re used. In the U.S., for example, 59 percent of app usage takes place within apps built domestically, while in China, 64 percent does. But in the U.K. and Brazil, domestic app usage is 13 percent and 8 percent, respectively.

“U.S. made apps only account for 16 percent of total time spent in apps in China,” writes Flurry’s Simon Khalaf, noting also that the size and growth rate of the Chinese app market will soon push U.S.-built apps’ portion of the Chinese app market even lower.

The concern here is that U.S. developers have been slow to think about localization efforts, having ridden the app wave so far resting on the fact that English is one of the world’s more dominant languages. Some other countries, meanwhile, have had a head start in terms of globalizing their mobile applications, the report finds. Developers in Finland, Denmark, Bulgaria, and Slovenia have been taking advantage of the localization opportunities, for instance. There are also many worldwide app hit makers outside the U.S., including Finland’s Rovio (Angry Birds), Russian Zepto Labs (Cut the Rope) and Australian Half Brick Studios (Fruit Ninja).

The cost of producing apps is still relatively inexpensive which helps contribute to the increasing globalization of the app market, along with the ease of distribution offered by app stores. But, says Flurry, the cost of promotion is rising. In related news, Fiksu also noted today that user acquisition costs in the U.S. reached their highest level since 2011, rising to $1.80 in July, up 20 percent from $1.50 in June, making the month the most expensive since December 2011.

Facebook’s mobile app advertising platform is partially responsible by driving up competition, while deep-pocketed buyers are increasing, forcing the littler guys to spend more to keep up. The big-name publishers are now dominating the tops of the app store charts, making it harder for newcomers to reach the top 250, potentially turning the app stores into winner-takes-all markets. And by the looks of Flurry’s findings, many of those winners won’t be based in the U.S.