A month after Apple launched its App Store online, the iPhone-maker is reporting eye-popping results.
Users have downloaded more than 60 million programs for the iPhone, according to a Wall Street Journal report. Even though most of those applications are free, Apple CEO Steve Jobs told the Journal his company sold an average of $1 million a day in applications. That's a whopping $30 million in the first month.
Some quick math suggests Apple could haul in at least $360 million a year with its latest revenue stream if sales continue at this pace. Apple keeps only 30 percent of the revenues, which the company says covers its administration costs. Developers keep the remaining 70 percent.
"This thing's going to crest a half a billion, soon," Jobs told the Journal . "Who knows, maybe it will be a $1 billion marketplace at some point in time. I've never seen anything like this in my career for software."
A Validated Platform
The App Store's applications are intended to expand the iPhone's software features and make the experience more personal. Nearly 1,000 applications are available, with more than 200 offered free and more than 90 percent priced at less than $10.
Developers have created a wide array of mobile applications ranging from games to location-based social networking to medical applications to enterprise productivity tools. Users can wirelessly download applications directly onto an iPhone or iPod touch and start using them immediately.
"There's no way you would describe this effort at this point as anything but an overwhelming success. That's important for two reasons," said Michael Gartenberg, an analyst at Forrester Research.
One is the new revenue curve. Analysts assume more applications will be added to the store over time, which will only increase revenues. The other reason Gartenberg alluded to is validation of the platform.
"There could be developers sitting on the fence wondering how effective the Apple store would be at reaching consumers," he said. "Now they can see that lots of applications have been sold, so perhaps they should put theirs up there as well."
A cycle has begun. Once a platform receives positive feedback, it begins to develop more developers. More developers means more applications in the catalog. More applications means more opportunities to attract users.
"Phone differentiation used to be about radios and antennas and things like that," Jobs told the Journal. "We think, going forward, the phone of the future will be differentiated by software."
Watching Apple Grow
Other operating-system publishers have development platforms. Arguably there's been more applications available for Windows Mobile than for the iPhone and the iPod touch. But Apple seems to be taking the mobile-apps industry by storm.
"The problem is that the other platforms lack a central store that people can easily go to that they've already done business with and make purchases quickly from the store to the device," Gartenberg said.
Apple has not only created a software platform, the company has also created a strong distribution platform. The App Store, then, becomes significant in much the same way iTunes revenue is significant for Apple.
"Apple makes a lot of money from the iTunes Store through songs and video downloads. But at the end of the day, it revolves around Apple's core business of devices," Gartenberg said. "Apple is trying to get more devices into the hands of users."