What’s Stopping Mobile Apps From Taking Next Step?

With the arrival of the Motorola Droid and the Apple App Store milestone of surpassing 100,000 apps, the buzz around mobile apps has never been louder. All of this, mind you, in a little more than a year since the App Store launch.

But will mobile apps reach even greater heights? The popular answer is “yes,” although significant hurdles lie ahead.

[ Microsoft software chief Ray Ozzie says smartphone apps are overrated, CIO.com reports. | Tell that to Apple fans and their 10 great iPhone hobby apps. ]

Currently, Apple dominates the nascent mobile app market with 115,000 apps, according to Mobclix, which tracks mobile trends and operates a mobile ad marketplace. iPhone owners collectively download 100 million apps per month, whereas Android and RIM owners download 20 million and 300,000 per month, respectively, according to Mobclix data. Put another way, the average iPhone user (amazingly) downloads 11 apps per month.

The onslaught of mobile app downloads shows no signs of slowing, either. The recently released Motorola Droid already has 10,000 apps that run on it. Hot Droid apps include Twidroid for twittering, Meebo for Android for instant messaging, Google Voice for Mobile (which was banned from the App Store), among others.

The iPhone’s many game apps has made the smartphone a serious competitor to standalone game devices like the Sony PSP and Nintendo DS. Android is also emerging as a strong mobile gaming platform, even outperforming Apple, according to Mobclix. Apple has shown market-leading strength in social, entertainment, utility and navigation apps.

According to market research firm Gartner, the top 10 consumer app areas for 2012 will be: money transfer, location-based services, mobile search, mobile browsing, mobile health monitoring, mobile payment, near-field communication services, mobile advertising, mobile instant messaging, and mobile music.

Nevertheless, mobile apps face a few giant obstacles on their path to stardom. One hang up has nothing to do with smartphone innovations and killer apps—rather it’s the wireless coverage that many mobile apps depend on to deliver great customer experience.

One of the most popular iPhone regions is the San Francisco Bay Area, which is also home to a majority of iPhone app developers and, of course, Apple itself. But try tapping into AT&T’s 3G coverage while shuffling down Market Street in San Francisco. It’s almost impossible, rendering critical mobile apps that need the Internet to perform their functions practically useless.

What’s the problem? Verizon advertisements aside, AT&T does have 3G coverage in the San Francisco Bay Area. But the 3G network is as gridlocked as the Bay Bridge during commute hours. Consider this freakish stat: Since 2008, AT&T’s network in the San Francisco area has experienced a 3G data traffic increase of 2,000 percent. “Californians’ appetite for mobile broadband is unprecedented,” said Loretta Walker, AT&T’s vice president of external affairs for the Bay Area.

Hoping to get a handle on the problem, AT&T has invested nearly $65 million since 2008 to upgrade some 850 cell sites and improve its 3G wireless network in the San Francisco Bay Area. It’s a race of sorts to help iPhone customers gain better 3G wireless connectivity, improve performance and enhance in-building coverage.

Lackluster coverage is a threat to smartphones everywhere, and so AT&T plans to upgrade its 3G network nationwide with HSPA 7.2 technology, which should deliver considerably faster mobile broadband speeds. The upgrades are planned to begin in the fourth quarter, with completion expected in 2011, AT&T says. In the hot zone that is the San Francisco Bay Area, AT&T plans to roll out HSPA 7.2 next year.

Another hurdle: the mobile apps themselves. While iPhone apps are all the rage today, there’s the risk that they will burn out like so many tech fads. Or maybe they’ll simply carve out a niche in the great computing universe—far from the prophesized paradigm shift.

“Yes, iPhone has a lot of momentum, unquestionably,” Ray Ozzie, Microsoft’s chief software architect, told CNET at Microsoft’s Professional Developer’s Conference earlier this week. “But I think the phenomenon we’re in right now is the app phone. And if you look at the depth of apps that are on these phones, they’re not very deep. It’s not like Office or AutoCAD, where there are just thousands of man years that have gone into developing these apps. They’re relatively thin apps that are companions to some service.”

Tom Kaneshige is a senior writer for CIO.com. Send him an email at tkaneshige@cio.com. Or follow him on Twitter @kaneshige. Follow everything from CIO.com on Twitter @CIOonline.