With yesterday’s announcement by Apple that In App Purchase will now be enabled in Free Apps, we’re one significant step closer to a prediction I’ve been making for several months now:

it is my firm belief that the vast majority of Apps in the future will be free

The strategic imperative for companies of all sizes, brands, retailers, small businesses to launch iPhone Apps has never been greater.  Before the change in policy, in order to ever sell anything or charge for anything through an App the App could not be free.  So developers had to offer a lite version, and then a paid version.  For Brands, if they had any hope of selling or monetizing usage over time, they had to sell the App.  Yesterday’s change further cements the perfect analogy with websites — you can go to the vast majority of them for free, and publishers have a myriad set of ways in which to monetize consumers’ engagement.

With yesterday’s announcement, every company out there can offer a free iPhone App, thereby reducing the friction of driving adoption, knowing that over time they can work with their consumers to find offers that make sense for both parties.   At the Apps For Brands Conference we co-produced with Advertising Age in September, we heard again and again the incredible engagement and passion of the iPhone customer. Couple that data with the iPhone’s incredible market share growth - reported to now be 30% of the US Smartphone market, as reported by Alley Insider, and the marching orders to businesses are clear:  Develop an iPhone App!

As I’ve also been saying (click for my most recent interview with Robert Scoble), this also means that the number of iPhone Apps will balloon from the current 90,000 or so to well over 1,000,000 in very short order.  The challenges facing consumers to find iPhone Apps and for businesses to drive adoption of these apps will continue to exponentially grow, and we think the only scalable answer to this challenge will be the harnessing of word-of-mouth to drive true value to consumers and corporations.

At Appolicious, our goal continues to be to enable folks to find iPhone Apps by connecting to friends, and friends and friends;  and to help corporations drive adoption by unleashing the power of word of mouth for the quality apps they create.

Note:  Roy Furchgott of The New York Times posted a story this morning  (10/5) on the same topic; please read it and compare to this (originally posted 10/1).

There’s been a lot of commentary on Peter Farago’s great post on the Flurry Blog entitled: Mobile Apps:  Model, Money, and Loyalty.  In it, Peter uses actual Flurry data to graph app retention vs. frequency of use.  There’s a lot of great insight into frequency of use vs. retention.  Not surprisingly, the more frequently an app is used, the greater the retention.  Peter also makes the point on how more frequently used apps lend themselves to a subscription model vs. a purchase model.  It’s a great piece and I recommend you read it.

My question, as we think about the future over at Appolicious, is how important is frequency and engagement to apps for Corporate America?  As I stated in this post, we believe that the 75K apps in the iTunes App Store are going to 1MM;  and the vast majority of apps will be free.  We further believe that every company, brand, retailer, store, you name it will have an app in the iTunes App Store.

At the Apps for Brands Conference we co-produced with Advertising Age last week, we heard from many brands talking about strategies for adoption, reasons for app launch, and how to build an app.  So we are more certain than ever of this large macro trend.

But the question I ask is this - how important is it really for a large brand/retailer/corporation to have frequency of engagement?  The answer in my mind lies in web sites, as I believe the analogy to the early days of the world wide web is spot on. An online retailer fully well knows and understands that you are not coming back to their web site every day, not nearly as often as you will go to a news website for example.  An online brand understands that you will never visit their site with the frequency of your fantasy football website in the fall.

The key for these companies, however, is that when you do have a need for their product or service, you do go to their website.  Put another way, they really want engagement around the Christmas/Holiday Season — I would posit less important during the dogs days of summer for most toy retailers as an example.

So engagement to me is not the key issue for these companies and their apps.  They key is how to make sure that when the appropriate time comes, a) you have their app and b) you will use their app.  That is the challenge.  Unlike the web, where the search engines led by Google provide a straightforward (but not easy nor cheap) path to capture people’s intentions and use that to direct traffic to the site, the challenge to a brand or retailer is significantly harder.

First a brand must provide true value-add from the app — not just a reskin of the website but rather true use of the full functionality of the mobile device:  GPS, camera, accelerometer, etc.  The app has got to make the shopping and information experience better.  Second, brands must put together an integrated marketing strategy to ensure that these apps get downloaded at key times close to natural purchase decisions and also that awareness of the already installed apps gets regularly promoted.

As a brand, I would be extremely happy if on an annual basis my most loyal users used the apps enough, when necessary, to increase their satisfaction and hopefully spend.  As an analog, I am certain there are plenty of websites that are happy with 2-3 uses a year, as long as they are during the month of December.

Our approach to this problem at Appolicious is to focus on word-of-mouth — by enabling folks to easily find people like themselves who are using certain apps and to communicate with them pre, and post purchase of the app, we hope to do our part in “getting the word out” on these great branded apps for consumers.

What do you think?