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Published on January 22nd, 2009 | by Babar Bhatti


How App Store Changed The Game For Developers

Recently Apple announced that 500 million apps have been downloaded from its trend-setter App Store. It has been a success story which changed how things got done in the mobile application area. The App store was a new way of selling apps to consumers (see this case study) and sharing revenues for apps developed by anyone – without the tight monopolistic control exerted by phone companies (mobile netwwork operators). Sure, Apple still has tremendous amount of control over the app certification and approval. Now Google and BlackBerry are following the path as well.

There are 10,000 apps out there for iPhone include games, corporate and professional apps like CRM, applications for photo editing, project management, and exercise routines. San Francisco’s Beejive Inc. gets $16.99 for an instant-messaging product.

Here’s a recent article from Business Week which talks about developer’s role and the future potential of the app store.

Besides Salesforce.com, Oracle (ORCL) is developing corporate software for the device. A growing number of startups are charging higher prices for software, including applications for photo editing, project management, and exercise routines. San Francisco’s Beejive Inc. gets $16.99 for a program that lets instant-messaging addicts stay in touch with friends on a variety of messaging services at the same time. Research firm Evans Data says 20% of wireless developers now create software for Apple, up from 8% six months ago. “That’s the biggest leap we’ve ever seen,” says Vice-President John F. Andrews.

Apple’s challenge in software will be to create a way for developers to make a healthy profit at the same time it does. The company has software tools that make it possible to create an application in weeks rather than several months. It also keeps just 30% of the sales price for applications instead of the 50% many wireless carriers charge. (If the application is free, Apple takes nothing.) And because the App Store is part of the iTunes online store, where 100 million people already buy music, a popular application can quickly attract millions of downloads—creating sizeable audiences that are attracting advertiser attention.

Developers are finding ways to make money while charging little or nothing for their software. Startup Tapulous has given away more than 5.5 million copies of its eponymous game, which tests music fans’ ability to tap their iPhone to the beat of their favorite songs. The popularity of the free offering has drawn advertisers and persuaded CEO Bart Decrem to start charging $4.99 for a version with more features. Decrem says the combined sales and advertising revenue allowed the 10-person startup to turn a profit in December, six months ahead of schedule.

Broker TD Ameritrade offers its stock-trading application for free and makes money from trading commissions. It didn’t have to pay anything for the software, either. A five-person outfit in Argentina called iStockTrader developed the program in exchange for a cut of any trades.

Apple’s rivals point out that these are early days. While mobile-phone giant Nokia is developing its own app store, it can also help developers get their applications pre-installed on mobile phones so consumers don’t have to download them. That can end up being more profitable for the developer than being in Apple’s App Store. “We want to make money for ourselves and our partners by maintaining the value so the price doesn’t gravitate to zero,” says Tero Ojanperä, executive vice-president of Nokia Services.

Still, Andrew Fisher, CEO of music-software maker Shazam, sees developers gravitating toward Apple because of the company’s momentum. It’s a twist on the PC market, where the best applications appeared first, and sometimes only, on PCs with Windows. This time, the one benefiting is Apple. “That’s the position Apple has established,” says Fisher. “[The more software they offer], the more justifications there are for people to buy iPhones.”

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Founder and Editor of TelecomPk.net

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