The only way is App

Guy Daniels
By Guy Daniels

Feb 13, 2014

Apps; they’ll never catch on. Well, don’t tell that to the European Union, which has just commissioned a study from GigaOm that suggests the boom in mobile apps could result in a thriving European sector by 2018 that employs 4.8 million people and contributes €63 billion to the EU economy.

The “app economy” in Europe currently employs 1 million developers, and 800,000 people in marketing and support posts. This could rise to 2.7 million developers and 2.1 million support staff by 2018. But developers have raised concerns about a skills gap that could put this growth at risk.

Around 38 per cent of independent and in-house developers said EU companies had difficulties competing with US salaries, 32 per cent said that developer education was lagging, and 30 per cent said start-up developers lacked business expertise. Furthermore, 25 per cent said there were not enough developers.

To tackle this skills issue, the Commission is partnering with industry and other organisations in the ‘Grand Coalition for Digital Jobs’, as well as supporting grassroots initiatives such as EU Code week, and working to bring digital skills into the connected classroom.

If Europe can sort out the skills and staff retention issues, then it stands to profit economically from the emerging sector.

European buyers and advertisers spent €6.1 billion on apps in 2013 – 30 per cent of total global app spending – and this is forecast to grow to €18.7 billion in 2018. Consumer spending combined with advertising and contract work could lead to €63 billion annual revenue for the app sector within five years.

“In the face of increasing youth unemployment, these figures give me new hope,” said Neelie Kroes, Vice-President of the European Commission. “The app sector is one area of the digital economy where Europe can really lead. But we have to address concerns about connectivity and fragmentation – yet another reason to complete the telecom single market.”

Developers also reported that technical bottlenecks and fragmentation were also a cause for concern. Roughly a quarter of developers wanted to see 4G develop more quickly in Europe, and around 35 per cent were frustrated by the lack of interoperability between platforms like Android, iOS and Facebook (the report suggests that HTML5 might be the answer). A majority of developers complained of their de facto total dependence on platforms developed by American companies, with subsequent revenue impact.

“All apps and all mobile devices rely on broadband networks, yet today, the framework for European telecoms is shattered and constrained,” said Kroes. “Meaning poor wireless connectivity, connections that can’t easily cross borders, apps and services that are blocked or throttled by network operators, prohibitive surcharges to use your mobile abroad. In tomorrow’s world, where even cars are connected, where we rely on mobile apps even for our healthcare – resolving them will be absolutely critical.”

The report found that in 2013, developers earned €11.5 billion making apps for consumer goods, banking, media, retail and other clients. It is suggested they could expect to earn up to €46 billion through contracts of this nature in 2018.

According to an earlier study by Gartner, mobile apps will be downloaded more than 268 billion times by 2017, generating revenue of more than $77bn globally.

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