Apple’s App Store is like AOL in the 90s

By June 1, 2009Mobile

Reading this morning about the upcoming first anniversary of the App Store in Mobile Entertainment I was thought for the first time about the parallels with AOL in the 1990s.  In both cases an end to end solution, walled garden solution provided the best customer experience in an environment with the following characteristics:

  • Narrow bandwidth
  • Lack of payment standards
  • Challenging navigation
  • Lack of trust

And, like AOL, without doubt the App Store has been an awesome success.  I didn’t know this before, but according to ME after one month Steve Jobs said “I’ve never seen anything like this in my career for software”.  I wonder what he is thinking now?!?

Here are the stats (again from ME):

  • Number of downloads – 1bn in first nine months
  • Number of apps – 37k+
  • Average apps per device – 27 (I was surprised by this)
  • Number of iPhone programmers – 11,162
  • Average app selling price – $2.63
  • Estimated daily revenue – $1m

The interesting question, of course, is how far the parallel extends, i.e. will the App Store ultimately lose out to more open solutions?

Certainly we can expect the bandwidth, payment, navigation and trust issues to get sorted, which leads me to believe that as on the web open will ultimately win – so I guess the answer to this question depends on how Apple evolve their offering over time.  Certainly there is no technology or business model reason why they couldn’t evolve their offering and maintain their current leadership position, although as I have blogged before I wonder if their culture will be an inhibitor.

  • I think there is a difference between AOL closed and Apple open. back then closed vs open was a theoretical argument. We know have data to support open. And AOL closed was really super-proprietary whereas Apple is essentially building on quite a deep stack of standards (XML, IP, etc).

    'Ultimately win' is a long time– longer than the horizons of most investors or managers. So in a shorter-time frame, it is hard to see how Ovi or Pre or Android will genuinely compete to secure more than 2nd or 3rd place market share. You get one shot at making mark. Apple has done most things right (apart from a few odd app rejection), Ovi failed in its consumer launch. Android doesn't have a single group behind it pushing a super UX; and Pre is well, pre.

    So the determinants of success around the Apple model are ultimately the beauty of the device, the brand and the app store rolled into one. Your question of whether it is the best UX is just answered by trying any of the other app stores. Forget the theory (of open vs closed) how does it actually feel to a user. No doubt there will be segments who prefer Ovi or Appworld to the Appstore but I am sure those will be niches–and I question whether Ovi or BB will take the steps needed to mine the hell out of those niches rather than fight to be also rans in the main market.

  • Tks Azeem. I agree that in the short term Apple's position is very strong. Over the medium term though I think their competition comes from apps and web services accessed directly over the open (mobile) web. We wouldn't dream of buying our PC apps from an app store operated by the computer manufacturer.

  • To quote from Top Gun : “Bullshit ten minutes! This thing will be over in TWO minutes, get on it!”

    This markets move in shorter cycles. The iPod is nearly at its end of life and is only seven years on. So no doubt something will replace the App Store, but whether it'll make any difference to Apple is another point. They will have factored the likely lifecycle into the business model. It won't come as a surprise.

  • 😀

    For me the interest is in what businesses will be hot in 3-5 years.

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