Right before the year switched over, Citibank released its "US Internet Stock 2011 Playbook," and in there was an interesting prediction about the App Store. Despite what seems like constantly falling prices and the rise of "freemium" apps, Citibank expects Apple to pull in $2 billion in gross app revenue in 2011 alone. That's comparable to gross revenue for the entire online video advertising market, according to TechCrunch. And presumably this is just the iOS App Store -- later this week we'll be seeing the first fruits of the Mac App Store arrive, and it's likely that market will pull in a nice chunk of change for Apple as well.
Smartphone software in general is also set to grow -- Citibank says that by 2013, the app market should be worth around $27 billion (that includes, of course, Android and any other platforms that should emerge in the next few years). Demand is strong for smartphone hardware, but I don't think the exponential growth of apps will continue for years into the future. Then again, who can tell? This is a market that barely existed just a few years ago, so where it's headed from here is anyone's guess.