Apple's App Store annual revenue estimated at $2.4B

[AppleInsider]

A new snapshot of mobile device usage offers a glimpse into Apple's App Store, suggesting that the online service takes in nearly $200 million from users per month.

The latest Mobile Metrics Report from AdMob for July 2009 shows that iPhone users download an average of 10.2 applications from the App Store per month, with 2.6 of those paid. However, iPod touch users appear to be more app-hungry, downloading an average of 18.4 each month, with two paid.

Most users surveyed paid for their applications after upgrading from a "lite" version of the same application, suggesting most prefer to try before they buy. The average iPhone user spend $9.49 per month on the App Store, bringing in $125 million from the 26.4 million user install base in total revenue each month. Comparatively, the 18.6 million iPod touch users spend an average of $9.79 each month, capturing $73 million in sales.

The survey also found that the Android Marketplace is popular as well, with users downloading an average of 9.1 new applications per month. However, Android users are reportedly less likely to open their wallets, as the average user buys only one application per month, and only 19 percent of users buy paid apps.



Android's total presence in the market ballooned 53 percent during the period, bringing it to an estimated 7 percent worldwide OS share, and the Nokia N97 debuted as the ninth most popular handset in the U.K. Total worldwide mobile access increased 17 percent month over month, hitting 9.7 billion.



No matter the platform, more than 90 percent of those who download applications to their phone do it directly on the phone, rather than transferring over from the computer. The survey was based on over 1,000 iPhone, iPod touch and Android users.



Last month's Mobile Metrics Report found that more than half of all iPhone and iPod touch users worldwide were from the U.S., but predicted international growth was outpacing stateside sales.

[blur35mm]

After they pay out Developers that would leave Apple with a $60 million profit. (assuming 70% for developers 30% for Apple).

Interesting to see Android jump so high. WebOS isn't even making a dent. Interested to see if Android users do not buy apps because of a perceived quality issue, or if the same types of apps on the iPhone are just free.

Would be more interesting to see the % breakdown of types of apps PURCHASED. Have to assume gaming accounts for the largest %.

Cheers-
Blur

[iCarbon]

keep in mind that its 60 million/month

=720 million/year

[blur35mm]

Originally Posted by iCarbon

keep in mind that its 60 million/month

=720 million/year

Good point! ;-)

pretty amazing.

if they open up to Verizon and Sprint next year, it is game over for PALM. $99 handset, incredible app store, phone that has just reset the bar.

sorry symbian, you are on your way out.

[Logisticaldron]

Originally Posted by blur35mm

Would be more interesting to see the % breakdown of types of apps PURCHASED. Have to assume gaming accounts for the largest %.

That is a good point and likely a correct assumption. Until Andorid and WebOS give the developer proper tools that can use the HW directly gaming simply won’t happen, and that does seem to be where the real money is for apps. I’m not even a gamer yet I’ve spent $10 for a game I’ve used once or twice simply because it was a convenient impulsive buy.

[PaulMJohnson]

Originally Posted by iCarbon

keep in mind that its 60 million/month

=720 million/year

Let's remember that's revenue, not profit. I don't know a lot about running a server farm, but I can't imagine it's cheap to keep the iTunes infrastructure running.

I assume from Apples standpoint if they breakeven they will be happy, since the huge scope of App store is a big winner for iPhone over the others.

[blur35mm]

Originally Posted by PaulMJohnson

Let's remember that's revenue, not profit. I don't know a lot about running a server farm, but I can't imagine it's cheap to keep the iTunes infrastructure running.

I assume from Apples standpoint if they breakeven they will be happy, since the huge scope of App store is a big winner for iPhone over the others.

They are making a killing on the app store guaranteed. It certainly does not cost them $60m a month to run that part of the business. I would presume maximum $9-15m per month including all the overhead. I'd bet maybe half of the 30% cut they take is to cover costs giving them a 15% EBITDA.

iTunes infrastructure was in place and humming making money long before App store was integrated so they had the cost model down to a science. Apps use up more bandwidth but they definitely have a good deal with a major CDN provider (speculation on my part) and no doubt are getting economies of scale. Whomever that CDN provider is gets a nice chunk of change from Apple every month.

I am sure most of the $$ they make on it is funneled back into R&D buckets. It has to be, how else can they keep innovating?

[PaulMJohnson]

Originally Posted by blur35mm

They are making a killing on the app store guaranteed. It certainly does not cost them $60m a month to run that part of the business. I would presume maximum $9-15m per month including all the overhead. I'd bet maybe half of the 30% cut they take is to cover costs giving them a 15% EBITDA.

iTunes infrastructure was in place and humming making money long before App store was integrated so they had the cost model down to a science. Apps use up more bandwidth but they definitely have a good deal with a major CDN provider (speculation on my part) and no doubt are getting economies of scale. Whomever that CDN provider is gets a nice chunk of change from Apple every month.

I am sure most of the $$ they make on it is funneled back into R&D buckets. It has to be, how else can they keep innovating?

Yeah, I'm not saying they make no profit on it (though I acknowledge my first comment suggested that), but my point is I don't think the profits will be huge. I agree that iTunes was up and running, but App store I presume needs a lot of people vetting the apps as well, plus the additional bandwidth costs.

As for the money going to R&D, I'd say from looking at their cash flow statement, the majority of it seems to be going in the bank!

The main point I think is App store drags people into Apples ecosystem, and once people are attached to one technology, it's hard to get them off - look at how many people still use Windows! This will make iPhone a cash cow for a hell of a long time.

[Gazoobee]

I don't believe these numbers.

Recent tracking by developers indicates that 95% of all the apps in use are stolen copies used on jailbroken phones. If that's true, then the total volume of apps in use would be ten or twenty times that indicated by these figures, which makes no sense at all. This is a really really high estimate IMO.

[blur35mm]

Originally Posted by PaulMJohnson

The main point I think is App store drags people into Apples ecosystem, and once people are attached to one technology, it's hard to get them off - look at how many people still use Windows! This will make iPhone a cash cow for a hell of a long time.

Absolutely agree with you here. It is what they were saying a few years back iPod will have Halo effect. iPod got people to look at the iPhone. iPhone is getting them to look at Macs.

MSFT's new ad campaign is a good one, but consumer awareness of Macs is on the uptick and the retail stores was pure genius.

[SpamSandwich]

Originally Posted by Gazoobee

I don't believe these numbers.

Recent tracking by developers indicates that 95% of all the apps in use are stolen copies used on jailbroken phones. If that's true, then the total volume of apps in use would be ten or twenty times that indicated by these figures, which makes no sense at all. This is a really really high estimate IMO.

The figures could be too low or too high. Obviously we have no real way to confirm any of this speculation, and using a sample of 1,000 users to represent millions of actual customers could be very, very inaccurate.

[christopher126]

Wow, this is amazing! Even if the numbers are half true! What it means to me is Apple will have more $'s to invest in R&D! Not only to make the App Store/iTunes better but to make the iPhone and iPhone OS better and better! That's good news to me...Look how they improve the iPod line and seriously, they don't really need too. They have 75% of the MP3 player market, and yet they do! Consistently, year after year.

It's rather like Nike, they sell boat loads of shoes so they can afford to redesign/improve their tennis shoe line like every 4 months. Where Reebok can't keep up with the rate of innovation...think Motorola and Pre here and in some respects RIM and MS.

Another example is the Toyota Prius version IV, remarkable. GM hasn't been able to match Toyota's innovation for decades. GM's 'cunning' business model is to design a subpar car and each new model year stick some sort of plastic air foil or pseudo vent on it and call it new! Finally the American market has seen through GM's charade. Rather like MS camouflaging Windows in 'Areo.' Very cunning, MS. So cunning that if you stuck a tail on it, you could call it a weasel!'

Just to provide some scale, it takes 300 man years of design time to "upgrade" the Toyota Camry! Phenomenal!

I wonder how much time and resources it took to code/test Snow Leopard. Apple and Nike are two of the few American companies that 'get it!'

Best to everyone as I drive around in my Prius (made in Mississippi BTW) listening to music on my iPhone (made in China not USA, my one complaint against Apple) on my way to my Tennis match wearing my Nike tennis shoes (made in China not USA, my one of many complaints against Nike)!

[digitalclips]

Come on, push AAPL over $170!

[Gazoobee]

Originally Posted by SpamSandwich

The figures could be too low or too high. Obviously we have no real way to confirm any of this speculation, and using a sample of 1,000 users to represent millions of actual customers could be very, very inaccurate.

True enough.

And the one or two developers that tracked their applications to find out that 95% of their users were using stolen apps that I quoted is not necessarily representative as well I guess.

It just seems like a lot of extrapolation is going on either way and that none of these numbers are anything to really rely upon.

[christopher126]

Originally Posted by christopher126

Wow, this is amazing! Even if the numbers are half true! What it means to me is Apple will have more $'s to invest in R&D! Not only to make the App Store/iTunes better but to make the iPhone and iPhone OS better and better! That's good news to me...Look how they improve the iPod line and seriously, they don't really need too. They have 75% of the MP3 player market, and yet they do! Consistently, year after year.

It's rather like Nike, they sell boat loads of shoes so they can afford to redesign/improve their tennis shoe line like every 4 months. Where Reebok can't keep up with the rate of innovation...think Motorola and Pre here and in some respects RIM and MS.

Another example is the Toyota Prius version IV, remarkable. GM hasn't been able to match Toyota's innovation for decades. GM's 'cunning' business model is to design a subpar car and each new model year stick some sort of plastic air foil or pseudo vent on it and call it new! Finally the American market has seen through GM's charade. Rather like MS camouflaging Windows in 'Areo.' Very cunning, MS. So cunning that if you stuck a tail on it, you could call it a weasel!'

Just to provide some scale, it takes 300 man years of design time to "upgrade" the Toyota Camry! Phenomenal!

I wonder how much time and resources it took to code/test Snow Leopard. Apple and Nike are two of the few American companies that 'get it!'

Best to everyone as I drive around in my Prius (made in Mississippi BTW) listening to music on my iPhone (made in China not USA, my one complaint against Apple) on my way to my Tennis match wearing my Nike tennis shoes (made in China not USA, my one of many complaints against Nike)!

Well said!

[SGSStateStudent]

Originally Posted by Gazoobee

I don't believe these numbers.

Recent tracking by developers indicates that 95% of all the apps in use are stolen copies used on jailbroken phones. If that's true, then the total volume of apps in use would be ten or twenty times that indicated by these figures, which makes no sense at all. This is a really really high estimate IMO.

Yeah right.. as if..

[spliff monkey]

Originally Posted by christopher126

Wow, this is amazing! Even if the numbers are half true! What it means to me is Apple will have more $'s to invest in R&D! Not only to make the App Store/iTunes better but to make the iPhone and iPhone OS better and better! That's good news to me...Look how they improve the iPod line and seriously, they don't really need too. They have 75% of the MP3 player market, and yet they do! Consistently, year after year.

It's rather like Nike, they sell boat loads of shoes so they can afford to redesign/improve their tennis shoe line like every 4 months. Where Reebok can't keep up with the rate of innovation...think Motorola and Pre here and in some respects RIM and MS.

Another example is the Toyota Prius version IV, remarkable. GM hasn't been able to match Toyota's innovation for decades. GM's 'cunning' business model is to design a subpar car and each new model year stick some sort of plastic air foil or pseudo vent on it and call it new! Finally the American market has seen through GM's charade. Rather like MS camouflaging Windows in 'Areo.' Very cunning, MS. So cunning that if you stuck a tail on it, you could call it a weasel!'

Just to provide some scale, it takes 300 man years of design time to "upgrade" the Toyota Camry! Phenomenal!

I wonder how much time and resources it took to code/test Snow Leopard. Apple and Nike are two of the few American companies that 'get it!'

Best to everyone as I drive around in my Prius (made in Mississippi BTW) listening to music on my iPhone (made in China not USA, my one complaint against Apple) on my way to my Tennis match wearing my Nike tennis shoes (made in China not USA, my one of many complaints against Nike)!

Originally Posted by christopher126

Well said!

I'm suddenly reminded of a very funny South Park episode. You made my night. Thanks for the chuckle.

[freelander51]

How do they get those numbers. I mean I Have an iPhone since November 2008 and while I downloaded industrial quantities of apps in the beginnning, my pace has now slowed down considerable, having purchased app for all sorts of previously unknown needs.

but those needs are now fulfilled. Two photoeditiors, couple of GPS apps, 1screen with only games and so on. But once its fully kitted, there is no more need to *continue* installing/buying at that rate.

Once you are on the fourth screen I think that your pace effectively falls down to maybe 2 apps a month......

[ivan.rnn01]

Now we know, how much Apple Legend is. Even if it's bought with micropayments.

[ncee]

Originally Posted by freelander51

How do they get those numbers. I mean I Have an iPhone since November 2008 and while I downloaded industrial quantities of apps in the beginnning, my pace has now slowed down considerable, having purchased app for all sorts of previously unknown needs.

but those needs are now fulfilled. Two photoeditiors, couple of GPS apps, 1screen with only games and so on. But once its fully kitted, there is no more need to *continue* installing/buying at that rate.

Once you are on the fourth screen I think that your pace effectively falls down to maybe 2 apps a month......

My guess is they ask folks.

I know my brother has downloaded about 65 app's over the last 6 months or so.

A friend has downloaded over 100. Another friend has downloaded about 15-25 he said.

My son has many friends with the iPhone, and they numbers run pretty much the same 15-20, 40-55, "A ton of them?", "not sure, but over 100", "god I'd say some 50 -60 or so". These are what his friends said, when he asked them how many they downloaded.

YES the numbers are going to vary a lot. Kids will be downloading like it's their job, while MOST adults, will be much less.

Business folks young and old, seem to be downloading a fair amount, and newbies, well hell, they just want it all.

Whatever the amount, we know it's a LOT, and it will be A LOT more as time goes, and more folks purchase iPhones, and more folks create app's for the iPhone, and more folks find a need for these apps.

Let us now forget, Apple WILL figure out a way, to tie the iPhone, into iTV, iMac, iWant, and last but not least, iPay (which is what you say, when you own Apple products).

It's a company that will go down in history, as one of the most innovated, largest, coolest, hypest, And Apple WILL be joining, purchasing, making, creating some new and exciting businesses very soon.

Will they purchase Google?

Will they purchase AT&T?

Will they purchase…?

Skip

[freelander51]

Originally Posted by ncee

My guess is they ask folks.

I know my brother has downloaded about 65 app's over the last 6 months or so.
A friend has downloaded over 100. Another friend has downloaded about 15-25 he said.

While I don't doubt the hunter/gatherer theory the question I am raising is - how many of these apps are being used regulary (even once a month)

[fulldecent]

$2.4b revenue / 45m devices (1) = $53 / per device.

I spent $15 on apps, so maybe this is reasonable. But $53 is a lot of money.



(1) http://brainstormtech.blogs.fortune....-ipod-touches/

[freelander51]

Originally Posted by fulldecent

$2.4b revenue / 45m devices (1) = $53 / per device.

I spent $15 on apps, so maybe this is reasonable. But $53 is a lot of money.



(1) http://brainstormtech.blogs.fortune....-ipod-touches/

Not if you buy Navigon or TomTom :-D

But seriously - it equates to about 25 apps with a pricepoint of 1.99 which does sound reasonable. Bejeweled, Pggle (GREAT GAME BTW) and Apple Poker alone amount to 15$

[SpamSandwich]

Originally Posted by Gazoobee

It just seems like a lot of extrapolation is going on either way and that none of these numbers are anything to really rely upon.

You just summed up 'the story of Apple'.

[reverie]

Originally Posted by fulldecent

$2.4b revenue / 45m devices (1) = $53 / per device.

I spent $15 on apps, so maybe this is reasonable. But $53 is a lot of money.



(1) http://brainstormtech.blogs.fortune....-ipod-touches/

And keep in mind that most of these device were sold very recently, so people hardly had any time to spend their $50. If you look through the details of the report, AdMob claims that the average active user spends $10 per month on the AppStore. I find that ridiculous, and it doesn't match with the pretty clear picture that a lot of indie developers, as well as Apple themselves have painted for us when they regularly told us their download figures. But after following last year's string of election polls, I'm guessing that AdMob will stand by these numbers no matter how many people disprove them and it's the kind of story that AI users just love to believe in, so that's all from me in this thread.

[Brainless]

Originally Posted by freelander51

Not if you buy Navigon or TomTom :-D

But seriously - it equates to about 25 apps with a pricepoint of 1.99 which does sound reasonable. Bejeweled, Pggle (GREAT GAME BTW) and Apple Poker alone amount to 15$

Hey, it says those are figures per MONTH ! It would be reasonable for typical lifespan of the device, but I really doubt that every average user buys 25 apps @1.99 month after month.