Tuesday, August 12, 2008

iPhone App Store’s $30 Million May Be Second Best

Apple CEO Steve Jobs said in an interview yesterday to Wall Street Journal that the iPhone AppStore made $30 Million in the first month of sales. That is  approximately close to $1 million everyday for July. Its an amazing feat when you think about the problems with the launch of App Store & iPhone 2... And $1 million a day is not a small amount, but will the business scale?? Will it be the winner for online content distribution??

Steve Jobs has already proved his amazing entrepreneurship in the past with the iPod and iTunes Store. Apple has changed the face of online music sales with AppStore-Vs-Steamits iTunes store and is surely building it up everyday by adding more and more content. The iPhone is also one of the most successful smartphone product, which in its first-generation already got a cult status and has been a hit in its second re-incarnation as well. But with all the success coming its way, there aren’t too many people who are looking at Apple’s shortcomings.

Apple’s failure in web services like .mac and MobileMe is probably its biggest recent failure. But then there is also the bad sales of AppleTV and Jobs Cube (oops MacMini) which still isn’t in the living room!! Apple desktop and laptop sales may be growing, but they still aren’t anywhere outside the US. But with those products not working as well, Apple still rocks with the iPhone.

The App Store fetches 30% of total revenue to Apple and the remaining 70% to the application developers/publisher. 30% does sound a lot for just hosting your App, but then with the developers getting rich for their not-as-much efforts, why would anyone have a problem with Apple getting an even bigger share?? For example, Super Monkey Ball is the most successful paid app on the App Store and has sold more than 300,000 copies in 20 days at $10 each. This means Sega (…and OtherOcean Interactive) made $2.1 million in 20 days. This has made OtherOcean create a new iPhone apps division, which obviously shows that they want to make many more such wonderful apps. I expect many more such developers coming up with interesting apps for the iPhone in the future.

But what we need to think is how much will people keep spending on the App Store and what will be the kind of competition that will come up for developers on the app store... If you need comparisons, most people will obviously look at iTunes, but I don’t think music and games/apps can be considered to be similar content. Obviously music can be downloaded and used whenever, where-ever you want. You could be playing your favorite tunes all through the day, but is it the same with games/apps on a mobile device?? How many hours can you game on the iPhone ?? How many apps do you need on the iPhone?? How much more will you really spend on the iPhone after that purchase??

On the PC side of things, there’s another company getting big on the online content distribution front. And its Valve Software, with its Steam Content Delivery System, which I think has more “steam” in the long run. Desktops/wired networks have lot more bandwidth to download and gaming hardware is lot more capable on PCs. Also we may be moving to specialized gaming consoles from desktop computers, but then Steam could very well be moved to consoles in the future. Steam already has 15million users, who use Steam servers for multiplayer gaming, buying new content, social networking and the like. Steam also has the support of many game developers and studios. And new studios are getting interested everyday to share their content on the Steam system. With all that and improving PC gaming numbers from other countries than the US, it feels that Steam could very well be the leading content delivery system of the future.

How Apple scales its App Store and how developers come up with new and interesting applications/games on the App Store will determine its future success. But the start is surely on track!! Probably, App Store is the constant stream of revenue for Apple, since someone somewhere is going to need an app, but then $1 billion revenue which Steve Jobs is expecting from the App Store is way... way too much!! Atleast not until every kid on the block owns an iPhone!!

1 comment:

Unlock iPhone 3g said...

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