The suits tried to get people calling what they sold "applications" right from the beginning. "Nobody will pay for a program, but they will pay anything for an application." Back then, an application was, literally, what you were using the computer to get done: a spreadsheet would be a program, budgeting an application. The suits bought and sold "applications"; users ran programs.

Then Eternal September happened, there were too few to push back, and all the other stuff paying customers used to demand--training, printed manuals, not crashing all the damn time--fell away, and finally the program became, itself, the whole application.

Then the users needed an abbreviation for what it was that was crashing: the "app".