How To Play The Mobile App Boom

Everybody has heard these days. App this. App that. Apps have changed the way we live: from how we consume to how we explore our world. It's also a humongous business, and is expected to top $29 billion by 2015. According to technology research firm In-Stat, the mobile app has transformed global commerce, and there appears to be no signs of slowing. “Largely spurred by the launch of the iPhone, mobile applications have been a strong growth market over the past several years. The number of applications available has exploded, which has sparked an increasing rate of downloads,” says Amy Cravens, Senior Analyst in the press release. The entire press release can be found here. We have already seen a number of names that have benefited from Apple's AAPL halo, and the mobile app space is no different. As Cravens said in the press release, the iPhone has largely been responsible for the growth of applications, or apps as they are known. Just about every company you could possibly think of has an app that helps generate revenues or eyeballs or both for the company. Amazon AMZN, Google GOOG, TechCrunch, Zynga, Charles Schwab SCHW, etc. The list goes on and on. As mobile computing continues to overtaken PCs with the advent of the iPad, smart phones, names like Apple, Google, and to a lesser extent Research in Motion RIMM and Microsoft MSFT have reaped the benefits of mobile computing. RIMM's problems are its own, but it is still part of a much larger trend of mobile computing and the app game. The average price that a consumer paid for an app was below $2.50, with most of them being priced at 99 cents or $1.99. According to In-Stat, downloads of those apps will reach approximately 48 billion by 2015. “The number of applications available has exploded, which has sparked an increasing rate of downloads,” Cravens went on to say. “As the market matures, developers and app stores must take innovative approaches and compete across multiple platforms to attract users.” Apple earlier said this month it has had over 15 billion apps downloaded from its App Store. Amazon has its own App Store and while no concrete numbers have been released, it is sure to grow in popularity over time, especially with the release of the Amazon tablet, which is expected later this year or early next year. Apps have transformed the way we consume. Not everything is done in an internet browser anymore, and if trends continue, there will be even less done in the browser than ever before. It kind of makes those browser wars in the mid to late 1990's look silly now. Speaking of silly, there's an app for that. ACTION ITEMS:

Bullish:
Traders who believe that app growth will continue to explode might want to consider the following trades:

• Go long Apple, which takes a percentage of every app sold in its App Store. The more apps sold, the more high margin revenue Apple generates.

• Consider Sky mobi Ltd MOBI, which operates the mobile application store in China.

• Also consider Google. As mobile applications grow, this inevitably leads to searching, and Google continues to remain the leader in mobile search, with its Android operating system all over the place.

Bearish:
Traders who believe that apps are nothing more than a fad may consider alternate positions:

• Short everything app related. All technology names that benefit from the gowth of apps. Apps consume data, and the cell phone tower stocks would see declines in revenues if data usage fell. SBA Communications Corporation SBAC, American Tower Corporation AMT are two examples.

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