Apple’s App Store set to become most successful mobile application store in history

“In the latest Silicon Valley gold rush, scores of programmers have raced to perfect and sell their own wares through the App Store, spurred on by stories of overnight riches, including the $250,000 earned by makers of puzzle game Trism. But as the market gets crowded and prices plummet, many developers like Trainer are resetting growth and demand expectations,” Olga Kharif reports for BusinessWeek.

“Developers had reason to hope for an iPhone app bounty. In June, Piper Jaffray analyst Gene Munster predicted that if 91% of iPhone and iPod Touch users purchased $10 worth of applications a year, the App Store would generate as much as $1.2 billion in revenue in 2009. Today, a little over two months since the store’s launch, the App Store already rings up $1 million in purchases a day, indicating potential annual sales of $365 million,” Kharif reports.

Kharif reports, “But considering how fast iPhones are flying off shelves, Munster’s figure may prove conservative, says Richard Doherty, director of Envisioneering Group. ‘It’s safe to say that some time this fall, the App Store is going to surpass revenues of all mobile application stores in history,’ he says.”

“The Cupertino (Calif.) company takes a 30% cut of App Store sales. But even the most successful developers are seeing sales skyrocket and then plummet after a matter of weeks as other apps rush in,” Kharif reports.

“Long term, the money won’t be in the fees, but in advertising, subscriptions, and sales of virtual goods, says Matt Murphy, who runs the $100 million iFund at venture firm Kleiner Perkins Caufield, which funds iPhone-related startups, most of them in software,” Kharif reports. “For now, Apple does not take a revenue cut in those areas. AdMob advertising network already places ads on some 25 iPhone applications. “Some publishers make $6,000 or $10,000 a day,” from advertising, says Jason Spero, vice-president for marketing at AdMob.”

More in the full article here.

There were millions of “empty” iPhones and iPod touches out there on App Store launch day, so it’s no wonder that app sales skyrocketed and then settled as the devices were filled. As Apple sells devices and they routinely come online, developers should logically expect to see their sales (and prices) normalize and become more predictable. As with every healthy platform, good apps will always sell, but developers should not expect to see the massive sales of the App Store’s early days again. That was a one-time only gold rush.

17 Comments

  1. “Long term, the money won’t be in the fees, but in advertising, subscriptions, and sales of virtual goods”

    God, I hope not. That sounds like something Uncle Fester would say.

  2. I think this period of price reduction will settle down in time because a lot of apps will disappear. Many of them are rubbish to will stop being seen as competition for the genuinely good ones giving them a chance to really make a name for themselves, the market will also begin to find a level for what people will pay for different things. At the moment there is so much choice, people are trying everything and everything so won’t pay “high” prices for every app. Price reductions will allow early customers to try things and shape the market subsequently.

  3. Any developers out there smart enough to come up with an app to help you find a lost touch or iphone? Is it possible to make the new gen touch beep and show a message to contact owner? Or how about geo tagging to see where you touch or iphone is? If they have an app to see where your friends are, they ought to have one to give you rough (touch) or exact (iphone 3G) idea of where it is. Is that doable? Send me part of your royalties. Tnx

  4. Okay, I just looked at the receipts from the iTunes, and I’ve spent $41 on 12 apps, with the most expensive being Crash Bandicoot and X-Plane at $10. In addition I’ve downloaded about 60 free apps.

  5. the Apple APP store is a cash cow. Apple will surprise on their next quarterly earning, but the stock may not necessarily follow due to macro-economic conditions that Apple will take into consideration in setting its guidance for next quarter… but who knows…

  6. That is why Apple has to ruthlessly kick out useless (limited utility) Apps like fart Apps and iTunes duplicates. We need some serious Applications that will take the iPhone/iPod Touch to the next level, something like Office in Windows/PCs. Fart Apps will not take the platform there and that is why MDN’s shortsighted complains and whining against Apples refusal of certain Apps is so irritating!
    Developers need to think hard and try solves real problems, problems and wants that we may not be aware of until they release the application.

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