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iPhone app sales growing at twice the rate of iTunes music

post #1 of 34
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The notion that Apple's iTunes revenues hinge on music may soon be called into question, as Apple's recent metrics reveal that the App Store may be quickly outpacing its musical counterpart with growth twice as quick.

Apple's boast that users have downloaded over 100 million apps for the iPhone and iPod touch in two months is more than just a good start among software -- it's a good start for a new iTunes feature in general, according to a new report.

If the iPhone maker sustains the download rate of 70 million apps per month achieved in August and the estimated $70 million in revenue that would accompany it from paid apps, the company would reach the one billion app mark and a corresponding $1 billion in sales sometime during 2009. By contrast, the iTunes Store's music section took over two years to reach one billion songs, cresting at the symbolic figure by early 2006.

This also assumes that Apple doesn't increase its download rate over time, which is seen as likely: the company's emphasis on the App Store as a vehicle for iPhone and iPod sales, rather than a profit engine of its own, may encourage more customers and developers to use the store. Sales of iPhone 3G also have yet to see the holiday shopping surge or deployments to other major countries, such as Russia.

For comparison, iTunes' music sales rate has also increased rapidly over time. After the first billion songs, it took just one year to double that figure.

Competitors may also face a struggle uphill to attract their own audiences, the report mentions. As neither Google's Android Market nor Microsoft's upcoming Skymarket for Windows Mobile will have the luxury of using self-made device sales to offset any costs, either of the phone operating system designers will have to dip into other resources. Those that do operate both the hardware and stores, such as Nokia and its Music Store, may also have to accept Apple's business model even if they would like their services to be independently profitable.

And while Nokia and a handful of other rivals either already run stores or expect to open them soon, Apple may create an advantage simply through being early. Google's store for Android apps isn't anticipated until the November launch of the first Android phone with T-Mobile, while Microsoft's Skymarket isn't due until the launch of Windows Mobile 7 sometime in 2009.
post #2 of 34
This is good news, but rapid growth from zero isn't exactly surprising.
post #3 of 34
Quote:
Originally Posted by walshbj View Post

This is good news, but rapid growth from zero isn't exactly surprising.

Neither is the growth compared to the iTunes Music Store which was not yet available on Windows, has a lot less free content ratio, and didn't have an established user base with pre-set accounts.
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post #4 of 34
Any bets on how long before Apple, Inc. (formerly Apple Computer, Inc.) renames the "iTunes Store" (formerly the "iTunes Music Store") and even, possibly iTunes itself (as these are becoming misnomers) into something more broadly appropriate?

It's always dangerous to change brand names, but if anyone can pull it off, Apple can.

It seems that Apple is building out a long term strategy that centers around devices (iPhone and iPod touch, Apple TV, etc.) and the online content store in one big, integrated ecosystem that goes beyond simply music and becomes an entirely new platform.

I'm actually surprised they haven't revamped iTunes and the iTunes Store to be a venue for selling iPods and iPhones and their accessories.
post #5 of 34
Quote:
Originally Posted by solipsism View Post

Neither is the growth compared to the iTunes Music Store which was not yet available on Windows, has a lot less free content ratio, and didn't have an established user base with pre-set accounts.

The Music store also didn't have a monopoly like the App Store does. There was a huge pent up demand for apps with no place to get them, whereas you could always get your music elsewhere (CDs) so there was no need to rush to the Music store to get your music as soon as it opened.

It is far too early to make any conclusions based sales to-date.
post #6 of 34
thank god for free crappy apps
post #7 of 34
Quote:
Originally Posted by Chris Cuilla View Post

Any bets on how long before Apple, Inc. (formerly Apple Computer, Inc.) renames the "iTunes Store" (formerly the "iTunes Music Store") and even, possibly iTunes itself (as these are becoming misnomers) into something more broadly appropriate?

It's always dangerous to change brand names, but if anyone can pull it off, Apple can.

It seems that Apple is building out a long term strategy that centers around devices (iPhone and iPod touch, Apple TV, etc.) and the online content store in one big, integrated ecosystem that goes beyond simply music and becomes an entirely new platform.

I'm actually surprised they haven't revamped iTunes and the iTunes Store to be a venue for selling iPods and iPhones and their accessories.

As you've stated, changed a brand name can be dangerous. You spend so much time, money and effort selling the name and making it a household name a change to make a part of the word ir contains accurate to the whole of what it does adds no value to the product. Coca-a-cola didn't change its name to Caff-e-cola when they stopped using cocaine as an active ingredient.

Only when you want to repackage a previously failed or stale product or service do you change its name. Look at MS' numerous efforts in digital music as an example.

As for the iTS products, I think it may be a bad idea to add HW to a content only store. I already think the iTS is overly cluttered as it is.
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post #8 of 34
Quote:
Originally Posted by solipsism View Post

Neither is the growth compared to the iTunes Music Store which was not yet available on Windows, has a lot less free content ratio, and didn't have an established user base with pre-set accounts.

Yep and their revenue from the apps may not be at that same rate due to the free stuff.
post #9 of 34
Apple continues to amaze. 100 million downloads. I had read some articles earlier about Apple denying a potential App Store application because it was mimicked iTunes.

This IS monopoly behavior and I hope Apple doesn't succumb to hubris.

Competition is what hones a company to produce excellent products. I haven't played around within this new section of iTunes yet, but I'd prefer Apple implement categories like amazon with unobstructed reviews and ratings, keeping a consumer satisfaction focus. Why not let the market decide whether or not an App like Ruby survives or not?

In short, Apple should only be turning down the most offensive or crappy Apps and let the market decide the rest. Keep it open, honest, and interactive. In the long run, this would encourage developers and grow this market exponentially.
post #10 of 34
Quote:
Originally Posted by bugsnw View Post

I haven't played around within this new section of iTunes yet, but I'd prefer Apple implement categories like amazon with unobstructed reviews and ratings, keeping a consumer satisfaction focus.


Pretty funny.
You have no idea how it works, butyou want them to change it to the WILDY succesful model Amazon is using to dominate the marketplace.

Your parents must be proud........
post #11 of 34
Quote:
Originally Posted by solipsism View Post

As you've stated, changed a brand name can be dangerous. You spend so much time, money and effort selling the name and making it a household name a change to make a part of the word ir contains accurate to the whole of what it does adds no value to the product. Coca-a-cola didn't change its name to Caff-e-cola when they stopped using cocaine as an active ingredient.

Only when you want to repackage a previously failed or stale product or service do you change its name. Look at MS' numerous efforts in digital music as an example.

As for the iTS products, I think it may be a bad idea to add HW to a content only store. I already think the iTS is overly cluttered as it is.

It's an interesting situation. But it's amazing how companies with deep pockets guide us, the sheep, through a name change. Verizon comes to mind. US Airways. Even Apple Inc. Spend enough money and people will instantly forget your old name, Datsun. Banks make it look easy. Just name a stadium, Bank of America.

I think eventually Apple will feel compelled to change it. At this point I think they still have time to come up with the right name.
post #12 of 34
Quote:
Originally Posted by walshbj View Post

It's an interesting situation. But it's amazing how companies with deep pockets guide us, the sheep, through a name change. Verizon comes to mind. US Airways. Even Apple Inc. Spend enough money and people will instantly forget your old name, Datsun. Banks make it look easy. Just name a stadium, Bank of America.

I think eventually Apple will feel compelled to change it. At this point I think they still have time to come up with the right name.

Datsun was initially chosen in the US because Nissan sounded too Japanese. Apple Computer, like iTunes Music Store, dropped a descriptive term from its name to but did not change the keyword to which the product is known by. You don't don't talk about Music as a service, you talk about iTunes.

Cingular acquired AT&T and chanfed their name to AT&T because of the better name recognition. I think iTunes will eventually change its name, but not from an Adrian Monk-like obsession with the defintion of "tunes" clashing with audiobooks, videos, games and applications. They will do it to bring life into an eventual stale product. Right now it's successful so no good will come of it.

PS: Lexus, Infiniti and Acura are examples of how brand recognition works the other way. IMO, if Apple wants to get into the business market with lowercost machines they will need an entirely new division that is not sold to the consumer, that basically dipoles of each other. I picture a dark-gray pizzabox style machines, like NeXT Station, with a product name not related to a fruit and model names that are more technical than Apple's consumer PCs.
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post #13 of 34
Quote:
Originally Posted by wbrasington View Post

Pretty funny.
You have no idea how it works, butyou want them to change it to the WILDY succesful model Amazon is using to dominate the marketplace.

Your parents must be proud........

I've only downloaded a few games and browsed around. What I was referring to in my post was the potentially heavy-handed use of the 'kill' switch that Apple has reserved for itself that could potentially scare away developers. Daring Fireball has the details on Podcaster's denial from Apple.

I don't begrudge Apple's discretionary powers as long as they are reasonably applied. I'd rather let the market decide which Apps are successful or not.

The reference to amazon was to advocate their hands-off approach.
post #14 of 34
Quote:
Originally Posted by bugsnw View Post

What I was referring to in my post was the potentially heavy-handed use of the 'kill' switch that Apple has reserved for itself that could potentially scare away developers.

I don't begrudge Apple's discretionary powers as long as they are reasonably applied. I'd rather let the market decide which Apps are successful or not.

You already are begrudging them. If you don't like it Jailbreak your iPhone and remove the code or don't DL any App Store apps.

The point of the kill switch is to scare away and remove apps from developers who would take advantage of customers. Apple is managing an easy to use marketplace and is taking responsibility for it. I certainly don't want an app that will install a virus or steal my personal info or use my phone for spam.

I've DLed hundreds of apps in the last two months. I'd say about 3x as many apps 3rd-party aps and plugins that I have installed on my computer. This is on a phone. I'm glad to be reasonablly assured that I'm not installing the latest Nigerian scam.
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post #15 of 34
Quote:
Originally Posted by solipsism View Post

You already are begrudging them. If you don't like it Jailbreak your iPhone and remove the code or don't DL any App Store apps.

Apparently comprehension isn't a strong point for some.

I think we all agree we don't want to download viruses and nigerian scams.

Rather than reword my post to accommodate lower denominators, let me point a few to:

http://daringfireball.net/
post #16 of 34
Quote:
Originally Posted by bugsnw View Post

Apparently comprehension isn't a strong point for some.

That's what I was thinking!

Quote:
I think we all agree we don't want to download viruses and nigerian scams.

But you have a problem with Apple taking a precaution to stop bad apps from ruining its platform? The few people that are going be paranoid that their favorite Sudoku game are far less than the damage that will be caused to the platform if something nefarious does get through.

Quote:
Rather than reword my post to accommodate lower denominators, let me point a few to:

http://daringfireball.net/

First of all, you linked to the mainpage. Each new article will keep bumping it down. Secondly, I've already read it and it has nothing to do with the kill switch, it's about Apple disallowing an app because it competes with their iTunes Store. They are preventing competition there, but it is anti-competitive in a legal sense?
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post #17 of 34
Quote:
Originally Posted by solipsism View Post

But you have a problem with Apple taking a precaution to stop bad apps from ruining its platform? The few people that are going be paranoid that their favorite Sudoku game are far less than the damage that will be caused to the platform if something nefarious does get through.

Is the phone OS that different from the computer OS? I don't remember getting any malicious software on my Macs, it makes me wonder if it's really a necessary precaution.
post #18 of 34
Quote:
Originally Posted by solipsism View Post

They are preventing competition there, but it is anti-competitive in a legal sense?

You can't see how that might scare developers?

I'm not a lawyer. I don't even play one on tv. What I want is for Apple to be wise with their discretion and not anti-competitive.

One could argue they have already crossed the line. I can think of another company that has used similarly described tactics.
post #19 of 34
Ketchup effect. Or was it catchup?
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post #20 of 34
Quote:
Originally Posted by bugsnw View Post

You can't see how that might scare developers?

I'm not a lawyer. I don't even play one on tv. What I want is for Apple to be wise with their discretion and not anti-competitive.

One could argue they have already crossed the line. I can think of another company that has used similarly described tactics.

The way I understand it, the terms for developers for other phone systems such Blackberry and Qualcomm devices are more onerous.
post #21 of 34
Quote:
Originally Posted by JeffDM View Post

Is the phone OS that different from the computer OS? I don't remember getting any malicious software on my Macs, it makes me wonder if it's really a necessary precaution.

The phone is more delicate situation than the Mac. In that it is always connected to a wireless signal and can send your private information without your knowledge. Can also send your current location without your knowledge.

Their already has been an app that Apple temporarily kicked off for sending information without the users knowledge.
post #22 of 34
Quote:
Originally Posted by bugsnw View Post

You can't see how that might scare developers?

I'm not a lawyer. I don't even play one on tv. What I want is for Apple to be wise with their discretion and not anti-competitive.

One could argue they have already crossed the line. I can think of another company that has used similarly described tactics.

The iPhone is Apple's platform and they are free to do what they want.

But I agree its bad policy to not allow apps to compete with its own. I've been wanting a podcast app that allows streaming or downloading without syncing through iTunes. Apple does not currently provide this and I'm amazed they won't allow anyone else to provide it.
post #23 of 34
Quote:
Originally Posted by JeffDM View Post

The way I understand it, the terms for developers for other phone systems such Blackberry and Qualcomm devices are more onerous.

Yes and no. In some very discrete aspects, yes. But we can write a feature to replace a built-in feature with no problem. We can sell stuff for BlackBerry even if RIM doesn't care for it.
post #24 of 34
Quote:
Originally Posted by bugsnw View Post

You can't see how that might scare developers?

Yeah, I can, which is why i mentioned this as being an anti-competitive move, but your comment, "What I was referring to in my post was the potentially heavy-handed use of the 'kill' switch that Apple has reserved for itself that could potentially scare away developers.", was not about Apple disallowing apps that it may want to provide themselves.
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post #25 of 34
Quote:
Originally Posted by walshbj View Post

This is good news, but rapid growth from zero isn't exactly surprising.

Also, a majority of the downloads are free.

Apps have been a great achievement for Apple, but music tracks are not really an apt comparison.
post #26 of 34
Really- what a flawed analysis. That's like Diet Coke selling more than regular Coke from the getgo.
post #27 of 34
Quote:
Originally Posted by teckstud View Post

Really- what a flawed analysis. That's like Diet Coke selling more than regular Coke from the getgo.

There are several reasons it's silly, but that's not quite what they are saying. Growth is different from volume.
post #28 of 34
Apps are going to be generally more expensive than music. This trend will continue as games become more exciting and more killer apps are created for the iPhone (and the iPhone matures as a true gaming platform).
post #29 of 34
Let's read carefully
Quote:
In the month since Apple opened an online software clearinghouse called the App Store, users have downloaded more than 60 million programs for the iPhone, Chief Executive Steve Jobs said in an interview at Appleā€™s headquarters. While most of those applications were free, Apple sold an average of $1 million a day in applications for a total of about $30 million in sales over the month, Mr. Jobs said.

and the other
Quote:
Meanwhile, users have downloaded more than 100 million applications from Apple's new App Store since launched less than two months ago.

So, in the first month users downloaded 60 million programs;
in the first two months users downloaded 100 million programs.
That means that in August there were only 40 million downloads, that's less than in July. To be more exact, not in the calendar month of July or August, but in the first thirty days there were 60 million downloads, and in the next 29 days - 40 million downloads.
post #30 of 34
Quote:
Originally Posted by statstracker View Post

Let's read carefully

and the other

So, in the first month users downloaded 60 million programs;
in the first two months users downloaded 100 million programs.
That means that in August there were only 40 million downloads, that's less than in July.


*less than 2 months ago*

3G's worldwide launch was July 11 right? So we have a several days to go (not counting Sept.)
post #31 of 34
Quote:
Originally Posted by captaincore View Post

*less than 2 months ago*

3G's worldwide launch was July 11 right? So we have a several days to go (not counting Sept.)

Roughly a dozen countries means worldwide now?
post #32 of 34
Quote:
Originally Posted by captaincore View Post

*less than 2 months ago*

3G's worldwide launch was July 11 right? So we have a several days to go (not counting Sept.)

3G was launched on July 11th, right. On August 11, Apple announced 60 million downloads and $30 million in revenue. Here is the link

Let's read the first paragraph under the chart (the article refers to)
Quote:
Everyone was impressed last month when Apple announced moving 30 million downloads through the new iPhone Apps Store, bringing in $30 million of revenue

The error in the number of downloads is clearly shown in the chart, it distorts sales rate pretty much.
post #33 of 34
Quote:
Originally Posted by JeffDM View Post

Roughly a dozen countries means worldwide now?

we're arguing semantics, but i think you know what i mean.

@statstracker, i'm not talking about that. i'm talking about what you said.

Quote:
So, in the first month users downloaded 60 million programs;
in the first two months users downloaded 100 million programs.
That means that in August there were only 40 million downloads, that's less than in July.
post #34 of 34
Quote:
Originally Posted by captaincore View Post

we're arguing semantics, but i think you know what i mean.

@statstracker, i'm not talking about that. i'm talking about what you said.

The number 100 million was mentioned on September 9th.
In the first thirty days there were 60 million downloads, then, from August 11 till September 9th - 40 million downloads totalling to 100 million.

I suggest taking accurate citations of what Jobs or any other Apple representative said (and not the distorted semi-forgotten numbers from bloggers) and make the corrected chart, not the distorted
1. On July 14th there were 10 million downloads total - Apple press-release
2. On August 11th there were 60 million downloads total - Steve Jobs' speech
3. On September 9th there were 100 million downloads total - see Apple News for that number

Please note that neither 70 million downloads nor $70 million in revenue have been mentioned.


That's a bit different from the chart the original article has been talking about.
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