Pre-Installed Apps: The Hidden Goldmine of the Smartphone Industry

The global smartphone market is highly competitive, driving manufacturers to seek new ways to boost revenue. Pre-installed apps, also called bloatware, have emerged as a lucrative business model for generating profits. These apps come pre-installed on new devices, and range from productivity tools and games to social media platforms and financial services. They may offer convenience in a few cases, however, mostly they are of no practical use. Moreover, their growing prevalence has raised concerns about user experience, privacy, and transparency.
Smartphone manufacturers strike deals with app developers and advertisers to include these apps on devices. In return, the app developers pay hefty amounts to smartphone manufacturing companies through revenue-sharing agreements based on user engagement. This arrangement creates a steady income stream for manufacturers, making pre-installed apps an integral part of their business strategy.
The Revenue Potential
Pre-installed apps have proven to be highly profitable. A prominent example is Googleโs $8 billion payment to Samsung to ensure its apps remain default on Samsung devices. In addition, many preloaded apps encourage in-app purchases and subscriptions, creating ongoing revenue opportunities. Advertising within these apps also generates income, further boosting profitability for both app developers and manufacturers.
The revenue potential in the mobile app industry is immense. In 2024 alone, mobile apps generated over $935 billion in revenue. Furthermore, projections suggest this figure will grow at a compound annual growth rate (CAGR) of 14.3% until 2030.
User & Privacy Concerns
Despite their financial success, pre-installed apps have sparked frustration among users. These apps often take up valuable storage space and, cannot be uninstalled. This limits user autonomy and creates a sense of dissatisfaction. Additionally, excessive bloatware can slow down devices, reduce battery life, and negatively impact overall performance.
Besides, privacy concerns add another layer of complexity. Some of the pre-installed apps allegedly collect sensitive user data without clear consent. This data may be used for targeted advertising or shared with third parties, raising alarms about potential misuse.
Recent controversies have shed light on the risks associated with pre-installed apps. In Thailand, the National Broadcasting and Telecommunication Commission (NBTC) recently summoned Chinese smartphone brands Oppo and Realme over an app called Fineasy. This pre-installed reportedly accesses sensitive personal information and sends persistent notifications.
In India, authorities are considering new policies requiring manufacturers to allow users to delete pre-installed apps. They are also proposing mandatory security screenings for significant operating system updates.
Such practices highlight the darker side of bloatware, where pre-installed apps infringe on user privacy and control. These incidents have intensified calls for stricter regulations to safeguard consumer rights.
Our Opinion
Pre-installed apps present a double-edged sword for the mobile phone industry. For manufacturers, pre-installed apps represent a vital revenue source and an opportunity to offer integrated services for manufacturers, However, their unchecked proliferation risks eroding consumer trust. Users increasingly demand transparency and control over their devices. The inability to remove unwanted apps can create resentment, undermining the perceived value of the device.
To strike a balance, manufacturers must adopt greater transparency in their agreements with app developers. They should also provide users with the option to remove or disable unwanted apps. These measures would not only address consumer grievances but also demonstrate a commitment to ethical practices.
Ultimately, the success of pre-installed apps as a revenue model hinges on maintaining trust. Manufacturers must recognize that while users may tolerate bloatware for now, the demand for greater control and privacy will only grow stronger in the years to come.
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