The App Store – Apple’s Cash Cow?

Courtesy Oreilly's

Courtesy Oreilly's

Despite enormous hype surrounding the App Store and enthusiasm from developers and customers alike, Apple may not yet be making returns from the App Store that they had hoped. Visiting a tool from O’Reilly, LightSpeed Venture Partners’ Jeremy Liew proposes that Apple may have made revenue of only 20-45 million dollars US. 

While not a pittance, such a number is insignificant for a company the size of Apple who draw hype from so many sources; specifically in light of a few developers who have made it rich, this is news for the app downloading community. Liew postulated that at a ratio of  1:15 to 1:40 paid to free apps, “between 25-60m paid apps have been sold” between 1.99$ and 2.65$ per app. This number is much lower than Apple’s own quote of  1 million dollars per day at the start of November 2008. 

While we are not in a position to make more than educated guesses, we can speculate that with additions inherent in iPhone OS 3.0: specifically in-app purchases, Apple stand to raise their revenues with even less direct administration. This also leads to the question of subscriptions and other methods of purchase or rent – for both Apple and developers, the new firmware will make drastic differences to cashflow.

However, with the injection of iPhone OS 3.0 into the marketplace, renewed interest in the platform may spark a new wave of developer subscription. At 99$ per registration, it may be fair to ask, who is Apple’s real market? Many developers never get their feet off the ground and others are shackled to Apple’s infernal and costly delays in app approval. In the end, the cost of development which includes owning a Mac computer and Leopard OS is a massive injection of money into Apple. Whether the Cupertino company make less or more than 1 million dollars per day is of little consequence as the horizon is full with the coming dawn of a new day for Apple. OS 3.0 will certainly spell rewards for the Big Apple and a few lucky developers. 

[via LIGHTSPEED Venture Partners]

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