stories from May 20th, 2009
Will Apple's Low Revenues Slow Down The App Store Phenomenon?
from the loss-leader-redux dept
Apple triumphantly announced a little while back that iPhone and iPod Touch users had downloaded more than a billion applications from its App Store in under nine months. But a research firm said last week that it estimated Apple had only earned a maximum of $45 million for itself from all those downloads. The figure was extrapolated from research into the pricing of apps, and isn't based on anything Apple has disclosed about App Store revenues, but it does illustrate how Apple's using the App Store: just like the iTunes Music Store, as a means to drive hardware sales rather than generate significant direct revenues. The App Store adds value to iPhones and iPod Touch devices, making the hardware more desirable, just like iTunes does for other iPod devices. That's the real value for Apple, and is measured in strong device sales, rather than direct revenues.Will these figures and their implication put the brakes on the app store craze that's tearing through the mobile industry? If Apple's already garnered more than a billion applications, and only has a max of $45 million to show for it, it would seem to call into question the widely held belief among mobile operators and other device vendors that app stores offer a valuable new direct revenue stream. Perhaps Apple's experience demonstrates that the real value of app stores is in extending the capabilities of hardware with new software and services, and using this to make the hardware more attractive, and in turn driving sales. But will the other players see app stores in the same way, or try to exploit them as revenue streams? Apple's shown with the iTunes Music Store that it is willing to use loss leaders as a tool to sell hardware. Will operators and other vendors be prepared to do the same?
Filed Under: app store, iphone, loss leader
Companies: apple