

Apple has made less than $45m in revenue from the app store - jeremyliew
http://lsvp.wordpress.com/2009/05/13/apple-has-made-no-more-than-20-45m-in-revenue-from-the-app-store/

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jorgeortiz85
The $45m headline number is a drop in the bucket compared to what Apple makes
from selling iPhone and iPod Touch hardware. The crucial point this story
misses is that Apple has generated a marketplace worth $50m-$112m in revenue
for makers of iPhone apps, with an App Store that launched less than a year
ago. This is huge.

Compare that to the $100m "iPhone Fund" that Kleiner Perkins announced in
March 2008 ([http://www.techcrunch.com/2008/03/06/kleiner-perkins-
anounce...](http://www.techcrunch.com/2008/03/06/kleiner-perkins-
anounces-100-millioin-ifund-for-iphone-applications/)). This seemed like a lot
at the time, eclipsing the $10m "fbFund" for Facebook Apps from Accel, which
itself seemed big at the time ([http://www.techcrunch.com/2007/09/17/facebook-
launches-fbfun...](http://www.techcrunch.com/2007/09/17/facebook-launches-
fbfund-with-accel-and-founders-fund-to-invest-in-new-facebook-apps/)).

While $100m and $50-112m seem like comparable numbers, the difference between
investment and revenues is huge. Think about it, would you rather have $100m
in VC money or $100m in revenues (per year!) from customers?

The biggest benefit to Apple is not the revenues they get from Apps. The
biggest benefit is from the thriving community of iPhone app makers who are
probably willing to spend on the order of $50-$112m of effort (per year!)
improving Apple's platform. A platform worth $2+ billion/yr for Apple.

~~~
alexyim
Agreed. On top of that, Apple really isn't spending that much to create this
platform. Once it's made, it requires a bit of overhead but basically the
revenue from this should cover it.

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paulhart
How many iPhone and iPod Touch sales have they made based on the availability
of third party apps? The ecosystem is heavily pushed to consumers.

~~~
dryicerx
I came to drop the same comment, but the last part of the article points that
out

 _Much like iTunes, Apple is using the App Store to drive demand for their
hardware._

~~~
wmeredith
This is a really good example of _mutual benefit marketing_. The 45m is
nothing to sneeze at, but it's gross, so their actual take may be minimal, but
it's a fantastic service to their customers and drives hardware sales for
them.

I honestly think it's the only future of marketing as the mindshare we're all
vying for becomes more and more saturated/savvy. I've written about this a few
times at my agency's blog
(<http://voltagecreative.com/blog/?s=mutual+benefit>) and I'll probably do a
write up on this.

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mdasen
I don't think that Apple really needs the App Store to be a money maker. In
fact, if it breaks even, it would be a win since the applications themselves
are adding value to the iPhone and iPod touch in the same way that third party
applications for Microsoft's operating systems have created so much value for
Microsoft.

The apps are quickly establishing the iPhone/iPod touch as _ _the_ _ platform
in handheld computing making it very difficult for third parties to compete
against Apple. With the Palm Pre coming out soon, a lot of people are going to
be looking at it like people looked at Macs a few years back - sure, I could
get a Pre and you can even argue that it's a better device, but everything
runs on an iPhone and I have no idea whether people will port things to the
Pre.

Apples knows - or at least should know - that the App Store is what will give
them the Microsoft advantage in the mobile space. As everything is iPhone/iPod
touch compatible, sales will keep going up which will drive even more app
creation which will drive even more sales. What a wonderful cycle, unless you
are on the outside trying to compete.

~~~
stcredzero
So how did Apple compete against Microsoft in the desktop computing space?
They built an ecosystem of their own. To make sure people would come there,
they saw what sucked about Microsoft, and made sure that those very weaknesses
were their own strengths.

There are plenty of things that suck about the iPhone. If Palm has the insight
to spot those and capitalize on them, then they'll win a place in the
smartphone businesss.

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petercooper
How could that sort of miniscule revenue finance some servers, bandwidth, and
a payment system? You'd almost think Apple were trying to make more money from
selling the phones and contracts :) </lowest form of wit>

~~~
pieter
All joking aside, their app reviewers might cost more money than all their
bandwidth, as they have already invested heavily in that infrastructure for
the iTunes store.

~~~
petercooper
Maybe, although the quality of some of the reviewing indicates to me they have
a lot of automation involved. But who knows? :)

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DougBTX
Good comment at the bottom: $99 developer registration fee from 600,000
developers is more than the speculated $45,000,000 made from selling apps.

~~~
boucher
There are almost certainly not 600,000 paying iPhone developers. I'm guessing
that number is people who have downloaded the SDK (which is available for
free).

There are only about 35,000 apps, and the average number of apps per developer
(who has an app on the store at all) is probably closer to 2 than 1. Even with
twice as many paid developers as people who have shipped apps, you're talking
about a maximum of 75,000 devs.

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climber
If apple gets 30% and makes a max of $45 mil; then all the users together got
no more than $45 / 30% * 70% = $105 million.

If this is the case, this seems like a very small market for everyone to be
fighting after.

