Steve Jobs is probably singing in his shower at the escalating success of the iPhone App Store. See the extract below from Apple’s press release today (US time), 14 July 2009. In less than three months Apple has gone from 1 billion App Store downloads to now 1.5 billion! In less than 12 months it’s gone from zero downloads to 1.5 billion.

Lightbulb has the lyrics and melody to fit! Cue music – Chuck Berry’s wonderful 1956 hit, You Can’t Catch Me. Berry is as thrilled with his new automobile as people are today with mobile phones.

Apple’s press release and hype

CUPERTINO, California—July 14, 2009—Apple® today announced that customers have downloaded more than 1.5 billion applications in just one year from its revolutionary App Store, the largest applications store in the world. The App Store is also growing at an incredible pace with more than 65,000 apps and more than 100,000 developers in the iPhone™ Developer Program.

“The App Store is like nothing the industry has ever seen before in both scale and quality,” said Steve Jobs, Apple’s CEO. “With 1.5 billion apps downloaded, it is going to be very hard for others to catch up. [emphasis added]

In that last paragraph Jobs is obviously making reference to competing smart phone application stores for Blackberry, Android and Nokia phones. It’s part of his standard marketing toolkit.

Famous for his spin, Jobs even has a dedicated entry in Wikipedia noting his capability – reality distortion field.

Hype and spin are common in marketing software. We discussed this in Predictions 2009: Information and Communication Technology – Part 1.

App Store economics

We wrote in Interpreting 1,000,000,000 downloads that the economics of the Apps Store includes these elements:

  • Apps price – for paid apps most cost between $0.99 and $9.99 (compare this to say a Treo 650 for which one user has said the price was “frequently priced $25 or higher” per app)
  • Higher priced apps – the more expensive apps sell for over $100, eg Guitar Tuner is $109.99 and Lexi-Comp medical reference apps range from $74.99 to $219.99
  • Apple’s share, hosting and marketing – Apple takes a 30% share of the revenue earned by paid apps, but hosts free apps at no cost. Apple also promotes the apps on iTunes. Apps can be accessed on  iPhones and iPod Touch; that’s a market of about 40 million devices and growing

Apple has not said how much it earns from the Apps Store. However, for an educated guess on what Apple may be earning from the App Store see Apple has made no more than US$20-45m in revenue from the app store (Lightspeed Ventures blog, 13 May 2009).

UPDATE, 23 July 2009 – Smartphone App Store Statistics

On announcing its 2009 Fiscal Third Quarter results, Apple’s Chief Operating Officer, Tim Cook quoted (the full transcript is here) the latest statistics during a briefing with analysts (emphasis ours):

“The App Store I think by any measure has been an unprecedented success with over 65,000 apps now in the store and over 1.5 billion apps downloaded. As you may remember, if you look at the App number, the over 65,000 from the store, that compares to the latest numbers we have for RIM and Nokia put them between 1,000 and 2,000 each. And the latest published number that we’ve seen on Android puts it less than 5,000.”

Noric Dilanchian