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Apple: Yes, It Makes Money On The App Store September 26, 2009

Posted by hruf in Mobile & Gadgets.
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There is widespread agreement that the Apple (AAPL) App Store has changed the face of the handset business, forcing other companies to scramble in a desperate attempt to keep up. At last count, Apple said over 1.8 billion apps had been downloaded; there are more than 75,000 apps in the store. Bernstein Research analyst Toni Sacconaghi asserts that the company with the App Store has a powerful first mover advantage at the high-end of the smartphone market “that will be difficult to emulate.” His view is that platforms with the best application stores will attract the most users, spurring developers to create more software, “creating a virtuous circle,” in much the same way that iPod and iTunes came to dominant music, and Windows and Intel became a PC standard.

But does it make money?

In his note, Sacconaghi dug in to that very question.Estimation:

  • 13% – 21% of all downloaded Apps are paid, including 7% of the top 100, and 35% of the next 900,
  • average price for paid apps $3

-> Apple generates

  • $60 million to $110 million revenue for itself
  • $140 to $250 million revenue for developers

Another way of looking at this, if you use the high end of his revenue estimates, is that the App Store has already created a more than $1 billion annual market for paid iPhone and iPod Touch applications – and the pace of growth is hardly slowing down. That’s a nice fat target for app developers – and a serious competitive issue for the other smart phone makers.

via Apple: Yes, It Makes Money On The App Store – Tech Trader Daily – Barrons.com.

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