When Apple announced the launch of the app store, it was seen as a new business opportunity for scores of small time developers. This is because with iPhone being touted among the coolest brands in recent times, there is going to be a lot of demand for the iPhones in the years to come. Also, with smartphones being the technology of the future, this was seen as a profitable area where developers could play their part.
The last two years have been very fruitful and it has led to the creation of an entire ecosystem that hitherto didn’t exist. Today, will millions of iPhones having sold worldwide, they serve as a viable platform to sell utility iPhone applications to. In one stroke, the iPhone app store has created livelihood for several small time coders.
So how does the whole thing work? The iPhone mobile apps on the Apple app store are not always ‘sold’. Many of them are also available free of cost. So, while some app developers play on the volumes – by getting a lot of people to download, they then stand to make money through ads. Others play on value by selling the app for a price so that while the volumes reduce, the company makes money off these sales. For every app sold, Apple takes a 30% commission on the value of the product. So, a $0.99 app makes the developer roughly 70 cents and earns Apple $30 cents.
This is now a terrific business. According to a new study, with close to 2 billion apps downloaded of late; 30% of them being paid apps, the total money Apple has made from the App Store is anywhere between $220 to $440 million annually. This automatically means developers have earned somewhere between $560 million to $1 billion a year.
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