1.5 Billion iPhone Downloads -- But How Much Money?
So, not long after serving up its billionth iPhone application (in April), Apple announces that the App Store has now played host to 1.5 billion iPhone downloads.
Of course, the App Store is the perfect place to prove the long tail theory. Certain apps -- such as Facebook, the more popular Twitter clients, Skype and Trism -- have huge followings. But the vast majority of the 65,000 apps in the store are pretty unpopular.
Equally, a sizeable chunk of those 1.5 billion downloads will have been free apps. People are much more likely to try them, even if they're deleted from the iPhone after just one use. But even if that's the case -- and even if there are relatively few apps charging more than a couple of quid that hit the big time -- the App Store has to be a pretty enticing money-maker, both for developers and Apple.
Back in May, Techcrunch did a bit of guesswork on what the revenue streams might look like. The IT boffins poo-pooed Lightspeed Venture Partners' guesstimate of $70m-$160m. "Apple gets 30 percent of this," Jeremy Liew, "so Apple has probably made around $20m-$45m from the billion iPhone apps downloaded."
At the other end of the spectrum, they highlighted an analyst reckoning on $800m annual revenues. Even a year ago, Steve Jobs admitted the App Store was doing $1m a day in revenues, and the Wall Street Journal this week quotes Sanford C. Bernstein analyst Toni Sacconaghi's estimate that Apple's commission on downloads could yield $150m a year.
That's a huge range of guesses and begs the question: why doesn't anyone know for sure? The simple answer is that Apple doesn't say.
The most recent quarterly filings have lots of interesting information (like Apple's $43bn in assets on the balance sheet... wow...), and we can see that "iPhone and related products and services" generated $1.5bn in sales for the quarter ending March 2009.
But do App Store revenues live there -- or under "software, services and other sales" of $625m? "Other music-related products and services" ($1.05bn) includes iTunes store sales -- but that's just music, audiobooks and videos, right? Or is it?
For an indication of just how big the market for iPhone apps could become, however, check out chart of the day at Business Insider: it's reporting that "there has already been more than $100m invested in iPhone app-making startups" by VCs and private equity firms. If that's even close to being accurate, you can bet the cash flowing through the app store will be in the billion-dollar-a-year ball-park already.
Bear in mind that in-app purchases (enabling you to pay for additional content within existing programmes on the iPhone) and third-party peripherals are only just arriving. Some of the newer applications are also mind-blowingly good. With the new iPhone 3GS selling a million units in less than a week of launch, too, the potential market for App Store is rising rapidly.
Meanwhile, up-and-coming rivals like Google Android and the Palm Pre are left guessing about how the App Store works and what success for their own download sites might look like. Smart guy, that Steve Jobs. No wonder Apple investors watch his health condition like hawks.