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Writer's pictureSlashData Team

App trade: a global opportunity

As we launch our new Developer Economics survey [UPDATE: Survey now closed – results out Jan 2014], Senior Analyst Andreas Pappas quantifies the international dimension of the app economy to visualise app trade routes. With barriers to international expansion disappearing, today’s app economy knows no borders. But almost 50% of developers are not yet crossing those borders.

VM87_AppsTrade

One of the things that make app development attractive to developers is the relatively low effort involved in selling apps across international borders, compared to other forms of international trade. The low barriers to selling apps internationally make app development attractive even in regions where smartphone penetration and app consumption has yet to reach a level that can effectively support local app development. This is the case in Asian countries with smartphone penetration below 20%, compared to over 50% in Western Europe. To some extent, app development is even more attractive in Asian regions, as labour and other costs are lower, compared to western app economies.

[tweetable]Despite the global app economy, the majority of app developers only address their local markets[/tweetable]. This observation is more prevalent in regions with high smartphone penetration and more mature app users.

As the next chart shows, over 95% of developers based in North America and Europe generate app sales in the region in which they are based in. On the contrary, in Asia, Latin America and Africa there is a sizeable minority of the local developer population that do not report any revenue in their local markets. For example, in Asia, 17% of local developers do not generate revenues in Asian markets. In Africa this number rises to 31%.

Global app trade routes

North America is a prime target for developers across the world

Looking at app exports, i.e. sales outside of a developer’s own region, we see that the majority of developers that generate revenue via exports, export to North America. [tweetable]35% of developers based in Europe and 33% of developers based in Asia, generate revenues in North America[/tweetable].

The number of developers that export to Europe is quite lower, with just a quarter of developers in North America and a fifth of developers in Asia generating revenue in Europe. In other words, the North American market is clearly a prime target for developers across the world.

Going global leads to higher revenues

For developers within any region, export revenues exceed local revenues by a large margin. [tweetable]Developers in North America generate 61% of revenues via exports, compared to 39% via local sales[/tweetable]

For Europe-based developers, sales are similarly skewed towards exports: 65% exports vs. 35% local sales.

Regional sales vs exports

This makes perfect sense, since the global addressable market outside of each region is larger than any one region, and demand for apps is global. However, looking at the share of developers that export apps, within each region we can see that nearly 50% of developers that have yet to seize the global opportunity.

Regional sales vs exports (devs)

While localisation may still pose significant difficulties and not every app may be a good export candidate, international expansion should be among the top objectives for app developers and entrepreneurs, particularly those based in small markets and those that need to scale fast.

You can help us capture and share more app economy trends by taking part in the 6th Developer Economics online survey. Have your say today and shape the app economy to come. Plus, figure out how you compare to developers in your region in terms of revenues, tools and platforms (free subscription to research panel required). [UPDATE: Survey is now closed – results out in January 2014]

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– Andreas P follow me on twitter (@PappasAndreas)

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