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Fix the economy? There's a mobile app for that.

Mobile apps could boost the economy just as previous high-tech breakthroughs have.

By Christianna McCauslandCorrespondent of The Christian Science Monitor / June 28, 2010

A woman in Boston passes a poster advertising applications for mobile devices. Users worldwide made 7 billion software downloads from mobile app stores last year, and the economic impact may carry beyond sales.

Taylor Weidman/The Christian Science Monitor

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In 1976, Apple built its first computer, kicking off a personal computer revolution that helped push the United States out of a deep economic rut a few years later. After the downturn of the early 1990s, the rise of the Web proved to be a bright spot in the economy. Now, as the US struggles to recover from an even steeper recession, can today's hot technology – mobile applications or mobile apps – provide a similar economic boost?

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It's a tall order. Information technology since its start has helped expand the US economy by some $2 trillion, says the Information Technology and Innovation Foundation (ITIF) in Washington. Mobile apps, pieces of software for mobile devices, can be downloaded for a few dollars, or even free of charge sometimes. So it takes big sales to generate big revenue.

Nevertheless, the prospects are encouraging. Globally, users made more than 7 billion software downloads from app stores last year; by 2012, they will be making nearly 50 billion, according to estimates by an independent study commissioned by GetJar, a cross-platform app store with locations in the US, Britain, and Lithuania. Entrepreneurs are busy creating apps for everything from games and news to real estate listings and recipes. Revenues from Apple's and others' primary app stores are slated to rise from $3 billion last year to $18 billion by 2014, according to Todd Day, an industry analyst at Frost & Sullivan.

"I was around in the '90s when the first browser came out, and this feels like that," says Daniel Odio, a cofounder of PointAbout, an app developer in Washington. "It feels like there's a lot of innovation happening now. I think we're only in the first half of the first inning."

So far, the growth in apps compares favorably with the PC revolution of the 1980s. Although software programs were more expensive than today's apps, they generated only about one-ninth the revenue ($340 million in today's dollars versus $3 billion), according to the Consumer Electronics Association. Of course, the PC software industry kept growing. By 1995, sales were 20 times bigger ($3.6 billion in today's dollars). If apps can match that pace, they will lift the economy.

"My reason for optimism as to [apps'] impact on the economy is related to the economy of scale," says Thomas Way, a computer scientist at Villanova University in Pennsylvania. "If 3.5 million iPad apps can be sold in about a week, I think that is a very positive indication of the depth and ability of the mobile app market to play a strong part in an economic recovery."

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