According to a report by technology forecasting group Strategy Analytics, the mobile app market could reach $35 billion in total revenue by 2017.

The study provided by App Ecosystem Opportunities (AEO) shows that over 350 billion smartphone and tablet apps will be downloaded by the end of 2017, if the current trends beginning in 2008 continue. Currently, the mobile application market is below the $20 billion mark, with Google and Apple holding just over 75 percent of the market share. This is expected to remain the case in spite of Microsoft’s release of Windows Phone 8 and RIM preparing to launch Blackberry 10 in early 2013.

Mobile Application Market Share GraphThe rise in total revenue is projected to be an effect of the growing market for tablets. As it stands, smartphones make up approximately two thirds of the mobile app market with the rest being tablets. However, AEO’s study predicts that this will change by 2017 as the tablet market stabilizes and the smartphone industry reaches a peak. It’s predicted that the continued production of various tablets will even out the total apps downloaded between smartphones and tablets.

Paid downloads currently supply the bulk of market revenue, pulling in around 70 percent. However, Strategy Analytics suggests in their Mobile App Revenue Forecast 2008-2017 that paid downloads will crest in 2014. By 2017, pay-per-download apps will barely make up a third of collected revenue. The remaining portion of revenue will be generated through in-app virtual goods and advertisements.

In-app advertising is a fast-growing market. In 2010, ads provided less than 15 percent of total revenue. Since then, ads have increased their revenue production by 20 percent. This number is forecasted to rise due to the accessibility of mobile devices.

According to a study by World Bank, over 70 percent of the world’s population has access to a mobile device. It is expected that companies will invest more in in-app advertising over the next five years, and developers will likely be forced to rely on advertising to generate revenue. It is for this reason that Microsoft and RIM now offer tutorials on using in-app purchases and advertising on their SDK websites, as they compete for third place behind Apple and Google in the mobile app market.

Tags: app advertising, App Ecosystem Opportunities (AEO), Apple, google, microsoft, mobile application market, mobile application market revenue billion, mobile apps, mobile market, pay-per-download, smartphones, Windows Phone 8