Apple’s App Store analysis: This Titanic is actually unsinkable

Chicago (IL) -With nearly 27,000
applications now available on Apple’s App Store, the number of iPhone
applications has now exceeded what it took Windows Mobile nine
to amass. With an addressable market of at least 23 million
active devices, the iPhone platform has become too big for most
developers to ignore. In this article, Chris takes an in-depth look at the structure of software
offerings on the App Store, and analyzes the latest stats to put it all in
perspective against other mobile platforms for TG Daily readers.

According to the website 148Apps,
which derived its name from the maximum number of applications one can
install on a total of
nine iPhone home screens, Apple hit the new 25,000 App Store
applications milestone sometime during this past Thursday night (March 5/6, 2009). To put
that figure into perspective, Global Intelligence Alliance estimated (and
Microsoft corroborated) that there were no more than 20,000 applications for
the nine year old Windows Mobile platform as of February 25 of this

The last official figure from Apple, provided in mid-January, called for 500 million downloads and 15,000 applications.
Since then, 12,000 more programs have been added in only 48 days — an average
of 250 new arrivals daily. At this rate, App Store should sport an
astounding 50,000 applications before the next-generation iPhone is
unveiled at Apple’s upcoming developers conference.

know what you’re thinking: 500 apps, 5,000 apps, 15,000 apps, 25,000
apps — who cares, right? It’s just a mobile phone after all. While we respect
the opinions of those who have been irritated with the constant rave about
mobile application stores and sales numbers, in reality we’re
witnessing a remarkable phenomenon unlike anything we’ve seen in an
entire software industry so far.

The stellar App Store
success took even Steve Jobs by surprise, prompting the CEO to note
that he has never seen anything like this in his entire career.
Approval delays that spoiled the App Store’s launch last July also showed
that Apple executives clearly didn’t estimate such a high interest in
the iPhone development. It will turn out o be a $1 billion per year market for Apple sometime in 2010.

Drilling the App Store

to the 148Apps stats, which are valid as of today, the App Store currently
carries a total of 26,370 applications, of which approximately one
quarter (6.237, or 23.65%) are free, while the remaining three quarters
(20.133, or 75.35%) are fee apps. The largest portion are games, one
fifth (20.47%), with half of the top 10 paid apps being gaming titles. According to the February ComScore survey,
iPhone users are nine times more likely to download games than other apps:
32.4% iPhone owners have downloaded at least one game in February,
compared with the average 3.8% on other platforms. Entertainment,
books, utilities and education software makes up 13.69%, 9,64%, 8.73%
and 7.21% of all content respectively. Combined with games, these five
application categories contribute to 60 percent of all App Store

Games are big business in the App Store, contributing one fifth of all content. Games, along with entertainment, books, utilities and education software make up 60 percent of the apps found in Apple’s App Store.
Source: 148Apps

Paid applications

If we drill only paid applications,
the average price of each paid program is $2.78, while the total worth of all paid
applications in the store stands at $73,315.67 (were every application’s cost added together), over half of all paid applications (10,671 or 53%) cost just 99 cents
while two thirds (15,765 or 78.30%) cost up to $2.99. Programs that
cost $1.99, $2.99, $3.99 and $4.99 make up 16.75%, 8.55%, 3.22% and
6.84% respectively of all paid applications available in the store. Another interesting bit of data: There area a total of 24 applications costing more
than $100 (0.12%), while 959 of them (4.76%) sell between $10 and $100.

All paid applications in the App Store are worth nearly $75,000. Nearly 25 percent is free software, while over half of the remaining paid applications cost 99 cents, the price that Apple recommended to developers as the “sweet spot.”
Source: 148Apps

Read on the next page:  Big market, Rival stores, App Store appeal to bedroom programmer, Conclusion

The ultimate pitch:  A 23 million market target

a newcomer like Apple to be able to overtake Microsoft’s nine year old Windows
Mobile in terms of software offerings — and achieving this reality in a less than
eight months — is nothing short of stunning.
[And in this editor’s opinion, it speaks very strongly of just how much people have wanted an alternative to Microsoft’s offerings. The consumer base has been screaming for something else, but one wasn’t available until iPhone.]

In my opinion, the mobile
industry might never witness such a rapid growth ever again. When the App
Store launched last July, it was the iPhone’s shine and an
efficiently-conceived distribution model that brought developers by the truckload over to the platform. Nowadays, it’s the pure promise of a gold rush: With
at least 23 million combined iPhone and iPod touch units in the wild
(over 17 million sold in 2008, 2 million sold during first two months
of 2009, at least 4 million iPod touches), and a consumer base willing to buy software in this way, the addressable market that
Apple’s platform now targets is too big for anyone to ignore.

These numbers are clearly the ultimate sales pitch attracting developers to the platform.

Jeff Holden, CEO of Pelago, calculated in mid-January
for Byte of the Apple
that iPhone users have downloaded as many applications as 1.6 billion
other mobile phone users. What this means to would-be iPhone developers
is that a non-iPhone application needs 94 times larger reach across all
other platforms to achieve the same number of downloads as on the
iPhone platform.

With nearly 27,000 programs now in the App Store, its title count has zoomed past
Windows Mobile — which took nine years in existence to amass only 20,000
applications (as of February 25, 2009). Apple’s App Store is also seeing continued tremendous growth as it has increased from 15,000 titles to 27,000 titles in just 48 days.

Everyone now has an App Store

fact that now all major players in this space are jumping on the
software store bandwagon is a compliment to the App Store model. It
also shows that key mobile players have finally come to their senses,
having realized that it’s the software
which ultimately determines the value consumers see in any given mobile
platform. The real question is, though, whether rivals stand any chance
of ever closing this gap.

Google’s Android Market is now four and a half months old but still carries less than 150 programs (132 free, 9 paid). True, Google enabled paid applications
less than three weeks ago, but the figure clearly shows developers have
no real interest to target the Android platform until more devices arrive to
expand the addressable market.

Others include RIM, Microsoft, Palm
and Nokia. They have yet to open their respective official stores for
business. Apple’s controversial approval policies (that result in certain number of rejected submissions) have even inspired one developer to come up with his own rogue app store which sells iPhone software that was banned or rejected by Apple.

Dubbed “App Catalog,” Palm’s new application store will carry applications written for the
new WebOS platform that will power the upcoming Palm Pre smartphone. Games will not
be in focus since applications for Palm WebOS are actually clever web
pages built around common web technologies like HTML5, CSS and
Javascript — something likely to be a disadvantage next to the iPhone’s scalable abilities in many software disciplines.

App Store revives bedroom programmers

of developers making hundreds of thousands of dollars
have attracted even more developers into the Apple fold. While just a
portion of programmers will ever earn that much, the basic promise is
still there: A simple, unique idea can get you very far on the iPhone. Those
who remember the old-school days of bedroom programmers during 80s
and early 90s can truly appreciate the fact that, in a way, the iPhone
has brought this ancient concept of the bedroom programmer once again into the spotlight. With iPhone, anybody can make it … it just takes the right idea.

Final thoughts:  The best is yet to come

with these App Store numbers we’re seeing, industry watchers think programmers have just started to scratch the surface of what’s truly possible.
Indeed, the arrival of
the next-generation iPhone with more powerful graphics, an updated CPU and the
new iPhone OS 3.0 should enable ideas to flourish into new, uncharted

Others simply note that with the iPhone still early on in the game, all
the great ideas that exist on other
platforms have not yet been explored. But even the basic routine
applications can be done in innovative new ways thanks to iPhone’s many
sensors, something most rival platforms
don’t fully offer yet.

Whichever way you look at it, one thing is
certain: Apple is onto something
big here. Analysts predict that sometime in 2010 the iPhone software market will reach the $1 billion in annual sales figure. There has never been a better time to be a
programmer for Apple.

Jay Freeman, a 27-year-old
California graduate student, created his own software store to allow developers whose programs have been banned from Apple’s App Store to still make a buck. He offers a comparable 70:30 cut just like Apple. The catch is that Cydia storefront
application cannot be installed unless users jailbreak their device
first, a hacking procedure that Apple plans to deem illegal
, though as of today it is still legal to jailbreak your iPhone.