It has been a busy few months for Apple – not only did the company release the new 3G iPhone, it also set up the new iPhone App Store to enable developers to sell their iPhone software. The new updated iPhone has done astounding business so far, but what about the App Store?
The iPhone App Store has been an unmitigated success so far. At least that’s according to Steve Jobs, CEO of Apple, who spoke to the Wall Street Journal about the online software clearing house.
It has been a month since Apple opened the App Store, and in that time the venture has seen 60 million downloads. With Apple taking a 30% cut of every transaction, this is not only good for the iPhone, but also for the company’s already burgeoning bank balance. Jobs reports that sales totalled around $30 million despite most of the available apps being free. This averages out to $1 million day over the course of the first month.
If sales were to stay at current levels, the App Store would see $360 million in sales every year. Jobs sees it rising to even greater heights, saying “”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.”
Jobs doesn’t see much profit in the App Store though, regardless of the revenues involved. The 30% take only just covers the expenses the site incurs, including allowing people to buy using a credit card. So instead of profits, Apple is hoping the App Store, and the applications available through it, will entice more people to buy an iPhone or iPod Touch.
Phone differentiation used to be about radios and antennas and things like that. We think, going forward, the phone of the future will be differentiated by software.
Software developers, who earn 70% of the revenue from App Store sales, have made roughly $21 million during the first month, with the top 10 developers earning almost $9 million. Sega sold 300,000 copies of its Super Monkey Ball game in just 20 days. As it retails at $9.99, this constitutes a $3 million sales total, and $2.1 million payout for Sega. It also seems to back up earlier claims that the iPhone is a viable gaming platform.
Some developers aren’t as happy as Sega however, after seeing their applications removed from the App Store. The most notorious of these much be Armin Heinrich, who saw his ludicrous (but also ingenious) ‘I Am Rich’ app removed for being a complete and utter waste of space.
Jobs also confirmed what was already suspected: Apple does have the power to remove undesirable applications from individual iPhones. This is because Apple has to have the option to remove potentially malicious software from iPhones. “Hopefully we never have to pull that lever, but we would be irresponsible not to have a lever like that to pull”.