For Apple the app store is all about selling iPhones

By May 14, 2009Mobile

Jeremy Liew of Lightspeed has posted a an analysis which shows that Apple has made no more than $20-45m in revenue from the app store. I won’t repeat the calculation here but it is a fairly straightforward product of the number of downloads, the average selling price multiplied by Apple’s 30% cut.

This is a much lower figure than I would have guessed, and it pales into insignificance against Apple’s revenues from selling iPhones (of which they have sold 13m). So as Jeremy points out this means that for Apple the app store is important only because it makes the iPhone a more usable device. Kind of like iTunes for the iPod.

The relative unimportance of the app store goes some way to explaining why Apple treats its development partners so shabbily.

The iTunes analogy doesn’t bode well for iPhone developers either – most of Apple’s partners in the music world feel that they have gotten on the wrong end of the power equation and would do things differently the second time round, principally because they haven’t made enough money. It could turn out to be that way with app store developers too.

If Apple’s 30% cut is $20-45m then developers have made $40-90m in aggregate, which isn’t much when you spread it across the 30k or so apps that are now available from the app store, and it still isn’t that much when you take account of the fact that most of the apps are free.

iPhone app sales are, of course, growing very fast which makes the future a bit more palatable than the past, but the strong implication of this for me is that focusing 100% of the iPhone as a platform is a dangerous game.