“Apple and the companies that sell software for the iPhone and iPod touch at the App Store have lost over $450 million to piracy since the store opened in July 2008 according to an analysis by 24/7 Wall St. There have been over 3 billion applications downloaded since the App program began. Bernstein analyst, Toni Sacconaghi, estimated that between 13% and 21% of those downloads are from paid applications. According to this analysis, the average price of an application purchased at the App Store is $3. Sacconaghi estimated that Apple’s revenue from the App Store is between $60 million and $110 million per quarter. That amount has certainly increased since this research report was published because of the rapid growth of the number of applications,” Garrett W. McIntyre and Phil MacDonald write for 24/7 Wall St.
“However, behind all this success lies an insidious force that has plagued the music, software, and movie industry for decades. Developers of iPhone applications have reported alarming piracy rates for their software, and the ease with which users may obtain pirated versions of paid applications for free is only increasing. The total number of applications available at the store, including those which are free and those which require payment, is in excess of 100,000,” McIntyre and MacDonald write.
McIntyre and MacDonald write, “Apple, which takes 30% of the revenue generated by downloads at the App Store has lost about $140 million from piracy.”
Full article here.
[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]
How is the software pirated? Just curious.
And how do they get a count of the volume pirated? Guess I’ll read the article.
Didn’t think you could share Apps
Oh poor Apple. It’s the developers taking the hit.
I don’t know how you can pirate an app on the iPhone and I don’t care. I am concerned about copyrights as a software developer and a photographer. Some of my pictures being sold on ebay illegally. I wish they would have my credit on it at least.
Still I believe this type of evaluation is purely wrong. People who pirate are not concerned at all about copyrights or simply don’t care. I saw many photographers using pirated software btw which is for the least disturbing… Regarding iPhone Apps I believe those pirates would not buy the apps anyhow. Maybe a very little %age would buy really. Is it really a loss after all. Now I don’t think the problem must be overlooked. Education would be a good start.
Or if you could, don’t these apps have your iTunes account (ie email address) attached to them or embedded in the file itself?
Complete CRAP!
Here we go again… Another “analyst” trotting out the old “money lost to piracy” logical fallacy. “There were this many apps stolen, which means $X million in lost sales”. Bullshit.
While piracy is certainly a problem, and Apple should take whatever reasonable steps it can to protect developers from the leaches of the world, there’s only so much they can do.
The fact is that there will always be turds who steal movies, music, and software. Most of those are the types of people who won’t pay for anything, no matter how cheap it is. They have no consciences; they’re just “takers”, and their thefts do NOT represent “lost sales”.
I agree with loloonthehair, those who use pirated soft would never buy at full price, so you cannot say it’s lost business.
24/7 Wall St is a site not to be trusted. Give credence to their observations at your investing peril.
Money lost market gained.
Apple may have lost a few coins on App piracy, but by ‘allowing’ their iPhones to be jail broken afforded Apple the opportunity to try various other markets unofficially. Namely, T-Mobile (US), underground GSM supported Chinese market etc.
I think, in the end, Apple would like to be free of the network providers (as it’s in Apple’s DNA to control total user experience in house), hopefully someday soon. Having unlocked phone allows that vision to be tested at the expense of the carriers.
All in all, I don’t see Apple sweating over a few hundred million dollar R&D;cost shared by ‘developers’ who would love to complain about Apple’s closed garden but now can’t. I mean, there’s always Nexus one.
Does anyone ever question the quality of the source or the information that gets out ?
Well you can only use these pirated applications on a jailbroken phone. So, what will come of this? Apple makes it harder for people to jailbreak their phones.
Most of those are the types of people who won’t pay for anything, no matter how cheap it is. They have no consciences; they’re just “takers”, and their thefts do NOT represent “lost sales”.
Companies like Coach and Gucci try the same argument for the knock offs being sold in China town. A $10 fake sale does not mean a $500 lost sale for the company.
So, we’ve got 2 iPhones and 2 Touches in the house that all sync to the same computer. When I buy an app for my phone, iTunes AUTOMATICALLY loads it to the 3 other devices when they sync.
Am I pirating the software? No. Did the analyst take multiple device households into account? No.
Oh my god all that money lost because of apple being incapable and being unsafe! Quick, sell all your shares while you can, the apple is falling!!!
Wait a minute, this analysts article seems a bit convenient and stretched. Perhaps this is exactly what the analyst wants
Piracy “losses” operate under the misconception that the person would have bought it if they could not steal it.
Not justifying piracy, it is stealing and does cost the companies money, but to account for it directly as a sales loss is flawed.
If you assume a slightly higher percentage of free apps or a lower average price per app explain the numbers? Seems like a rather calculated ’rounding’ in order to create some attention.
I meant to say, “…wouldn’t that explain the numbers?”
How did they come up with these estimates??? How do they know??? Apple doesn’t release any info, so, at best, these numbers are nothing but guesses.
Granted, it’s a bummer for the developers, but Apple really can’t lose. Think about it. What are the only two devices on which you can use apps from the App Store? The iPod Touch and the iPhone. Both of which are made by Apple. Therefore if you want to use an app, you have to buy one of Apple’s devices, so really they can’t lose.
It’s a similar story with iWork for the Mac. Although I’m sure Apple takes a very dim view on piracy, I find that the security measures to stop their software from being pirated is nowhere near as stringent as other software I’ve seen. And why? Because if you want to use it, you’re gonna have to buy a Mac.
I’ll add my voice to the choir. I’ve never bought the “lost sale” argument WRT non- physical media. Is it theft? Yes. But at this point, who doesn’t have stuff they would never, ever buy yet downloaded or copied because it was free? Like the excellent point by Artist, how can a sale you would never make under any circumstance be “lost”?
Toni writes “the average price of an application purchased at the App Store is $3.” That’s way to high. Most apps downloaded are free or $1.99. We have two touches syncing on one computer.
Estimates are overly inflated.
I’m sorry but if you can’t pony up 1 to 5 bucks for an app that someone put their hard work into creating then you should just be kicked in the groin, hard.
@ Appfan. Valid point. Nuff said!