Facebook To Add App Store

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(Image: Roberto Bichara)
(Image: Roberto Bichara)

BUSINESS

  • App Center announced as company prepares initial public offering
  • Rising number of mobile device users contributing to slowing revenue
  • 200 social apps on Facebook each have over 1 million users

Facebook is set to open a new online store where users can purchase apps and games, in a bid to maximize the company’s revenue from its enormous user base.

The announcement of the App Center from the social networking giant coincides with the company’s preparations for an initial public offering, which would value it at around $77 billion to $96 billion.

Developers will also be able to charge rates for sales of their mobile software in the App Center.

The launch will officially take place in the coming weeks, Aaron Brady, Facebook software engineer, wrote on the company’s Developers Blog.

Driven by Ads

Facebook stakeholders have raised questions over the company’s slowing profit. The latest figures show that revenues have taken a hit partly due to more users doing their social networking on smartphones, where its advertising is limited.

The company said in a revised prospectus that the skyrocketing popularity of smartphones and mobile devices has led to such a massive jump in daily user numbers that advertising is unable to keep up. 

A large majority of Facebook earnings come from online advertising, including fees for in-app purchases, where users buy apps within other apps – like Farmville by Zynga.

The company recently began efforts to boost its advertising strategy, but said the number of mobile ads being shown to its 900 million consumers remained insignificant.

“We believe this trend is driven in part by increased usage of Facebook on mobile devices where we have only recently begun showing an immaterial number of sponsored stories in News Feed,” it said in the amended prospectus.

App Popularity Soaring

The new App Center will give software developers the option to sell directly to consumers on Facebook – a first for the global apps market.

Users will have to purchase Facebook Credits on the social network’s payment system to buy their mobile apps. It will take a 30% share of the profits, as it also does with in-app sales.

Online games and music apps are among the most popular pastimes on the world’s biggest social network. Facebook reports that some 200 of the social apps available on its platform each have over 1 million users.

The company’s app store will include software for mobile devices powered by Google’s Android and Apple’s iOS operating systems, as well as featuring apps for PCs.

The apps will be sorted in the App Center according to ratings given by Facebook users, and will also take into account information like how long and how frequently they are used.

Key Statistics - Global Mobile Application Market (source: Berg Insight)

  • By 2015, more than 70% of all mobile handset shipments will be smartphones, creating a huge user base that will drive global app downloads to almost 1 billion.
  • More than 62% of total app downloads in 2015 will be for Android and iOS operating systems.
  • Revenue from app stores is forecast to grow at an annual rate of nearly 41% through 2015, when it is expected to top €8.8 billion.

By James Mulholland for
James Mulholland is a Paris-based internet and broadcast journalist specializing in sports, current affairs and technology news, while also freelancing as a photographer.

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