But paid downloads will generate $57bn between 2008 and 2017.
Strategy Analytics has released the App Ecosystem Opportunities report, which shows more than 350 billion smartphone and tablet app downloads will have taken place between 2008 and 2017.
Google Play will account for more than 45 per cent of phone downloads due to the vast reach of its Android OS, while Apple is set to command 56 per cent of tablet downloads in 2017 due to the iPad's market domination.
Interestingly, paid downloads will generate more than $57 billion globally over the same time period, but the average cost of a smartphone app will drop to eight cents in the next five years as free (with in-app ads) and freemium apps are set to account for 91 per cent of all downloads by 2017.
The change of direction will lead to a decline in revenue and increasing app store maintenance costs, such as marketing and app approval staff, which will prompt portals to devise new revenue generators.
Josh Martin, director of apps research at Strategy Analytics, said: "Paid downloads remain an essential component of the app ecosystem. Paid downloads will remain an important way for smaller developers to monetise their efforts. For developers committed to paid downloads transitioning to tablets may be the smartest way to preserve the business model over the long term.
"App Stores will also see a revenue crunch as more revenue is earned from advertising – revenue generated outside the bounds of the app store - and will need to prepare. Newer platforms such as Windows 8, BlackBerry 10, Tizen and Firefox are building their operating systems and storefronts with this knowledge which should go a long way to making them attractive to developers and end users."