Will Smartphones Help Crack the Economy’s Secrets?

Our new economic reality requires new tools to measure what’s really happening out there. Our smartphone usage may be as good a place to start as any.

Smartphones: They really are the personal electronic assistants envisioned in the sci-fi novels of yesteryear. Their latest trick: They just might be able to predict the direction of the economy.


No, I’m serious. Smartphones impact so much of their users’ daily lives, and all of that activity, of course, creates an increasingly interesting stream of data that can be captured, analyzed, measured, and interpreted. Indeed, a new field, mobile analytics, is emerging to analyze every angle of smartphone user’s habits. This means that smartphones are not just portals to the digital world, in one’s pocket, but perhaps portals to the real world as well.

flurry data

Consider the data in a new survey from mobile analytics firm Flurry. It’s an investigation of the smartphone applications-development market, and it reports that the number of apps in Apple’s App Store has more than doubled over the last six months. Flurry’s tracking of upcoming apps suggests that this growth will not slow and Apple will reach 100,000 apps on sale by the end of the year, placing it on a similar footing to a typical Wal-Mart’s 100,000 products on sale–amazing, if you’re happy to look at crass numbers like that.

iPhone Apps

As Peter Farago notes in his blog at Flurry reporting the data, he and his colleagues think of this “New Project Starts” statistic among iPhone developers as being somewhat analogous to New Housing Starts, “an important indicator in the U.S. economy.” New housing starts has historically been part of the economist’s mystical math for sampling the financial health of the nation. Farago merely uses this comparison to suggest that the method is therefore a good tool for predicting the smartphone app marketplace’s future.

iphone accessory


But I suggest that the idea actually goes further than that. As the economist Tyler Cowen noted in this Fast Company piece Create Your Own Economy (and his new book), we’re generating value from our digital activities such as IMing or Twittering your friends while on an otherwise boring train journey, or the emotional fillip you earn by playing a casual game. So we need new tools to measure and value these activities and interpret what they mean for our broader economy in the same way economists once realized that new home building had ripple effects across the business landscape and so was a worthwhile shorthand for how we’re doing.

So could we use App Store analytics as a more meaningful indicator of the economy in the future? After all, the source of data is far far richer, and much more personal than the plain number of new homes being built. We know what types of apps people are buying. What does a surge in buying and downloading games say about our relative economic health? What does the breakdown between free app downloads and sales tell us? There’s a huge pool of data out there. And it’ll soon be joined by even more financial information, because soon you’ll be taking pictures of your checks and uploading them to your bank with your smartphone and possibly swiping your credit card through it to purchase items on Webstores accessed via a mobile browser.

These social and economic habits, expressed through our smartphone usage, are sure to become more relevant. How long, then, until you’re reading, “Smartphone App Sales Surge: Is the Downturn Over?”

[via Flurry, ZDNet]

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