how much of a brilliant idea of a business model is Apple's App Store?

Apple's App Store: How Much Is It?


Posted by: Olga Kharif on March 18

According to iPhone apps tracker and reviewer 149Apps, you can own all 25,000 applications sold through Apple’s App Store for $71,442. If you think about it, that’s a staggeringly low number, which translates into an average of less than $3 per application (Actual per-application prices can be a lot higher, of course, since many of the games and e-books sold in the store are free). By contrast, it would take millions to buy everything on iTunes, with its millions of songs each currently priced at 99 cents. The higher average per-app price spells great revenue potential for the App Store.

Based on the App Store’s recent performane, the number of applications in the store now nearly doubles every two months (the store only had 15,000 applications in January). If that pace of growth continues, the store will have nearly 300,000 applications by year-end. Assuming the $3 average selling price holds, a consumer would have to spend $900,000 to buy up everything in sight.

The store’s revenue growth should balloon as well, though not at the same pace. App Store sales likely added up to $200 million in the December quarter, estimates Charlie Wolf, an analyst with Needham & Co. If app downloads were to grow at the same pace as the store’s catalogue — 20 times in one year — App Store sales will have reached $4 billion in the calendar fourth quarter of 2009. The whole company’s revenue in the calendar fourth quarter of 2008 (fiscal first quarter for Apple) reached $10 billion. Clearly, that’s not going to happen: The downloads are tied to sales of iPhone and iPod touch devices, and those aren’t going to grow 20 times this year.

Still, as the number of applications to tempt users with increases, that should help grow overall App Store sales faster. If an average iPhone user downloads, say, 10 apps today, that person may download 15 of them by year-end, if there’s more intriguing content to choose from. Apple’s March 17 software upgrade should help increase the number of downloads per user. It will enable a number of cool new applications: You’ll be able to easily locate people nearby who are playing the same game, for instance. For the App Store, the future looks bright.

source: http://www.businessweek.com/the_thread/techbeat/archives/2009/03/apples_app_stor.html?chan=technology_technology+index+page_top+stories