Now with the arrival of the new
3G iPhone, which goes on sale Friday, Apple has formed the applications
market into a second pillar of its phone business. Customers of the
iPhone -- old and new -- will greet this new venture gladly; gone are the days
of a scant few handpicked Apple apps. Now anyone with a good idea and a
bit of software savvy can make their own application.
The store opens Thursday and will offer 500 software applications. Games,
educational programs, mobile commerce, and business productivity are just some
of the plethora of software. Twenty-five percent of the applications are
free, including AOL's AIM. And of the remaining applications, 90 percent
are $9.99 or less, making them an easy impulse buy. With the iPhone
looking to one-up usurping rivals like Verizon's Voyager or the various
HTC smartphones, the applications store Apple hopes will give the iPhone an
The store has support from major players -- Facebook, MySpace, AOL, eBay, Major
League Baseball, Sega and Bank of America among others. Facebook and MySpace
have a new competitor though -- Friendbook (pictured). This new
iPhone-specific social network may become a top new social network.
To download applications, you can simply directly access the store and download
on your iPhone/iPod Touch. Additionally, it is also relatively simple to
install applications through iTunes; just update your iTunes to the latest
version -- 7.7 -- download the software, and sync it to your iPhone. In
addition to the Apps functionality, the new iTunes version features the Nike+iPod
functionality, long rumored, which allows you to track your runs using your
iPod and special Nike brand shoes.
Steve Jobs, Apple CEO and founder, is more than pleased with the store.
He states, "The reaction we have gotten so far has been really strong.
The quality and the sophistication of the applications you can write for the
iPhone is in a different class."
Having learned his lesson from the failure of Apple computers in the 1990s,
which was thanks in part to poor software support, Jobs was determined not to
make the same mistake. Now the new applications store promises to provide
fast, easy instant access to software perhaps akin to Valve's software
distribution network on the personal computer, but never before on this scale
on mobile phones.
The store is projected to generate as much as $1.2B
USD in yearly business by 2009. It will also help to fuel iPhone
sales. While Apple certainly looks poised for success, don't think Apple
is profiting much at the expense of its hardworking independent
developers. Apple gives developers a generous 70 percent of sales.
Mr. Jobs insists that the goal is not to make much profit, but rather merely to
"sell more iPhones."
The 30/70 profit split was derived from the video games industry, according to
Mr. Jobs. This seems logical as a third of the applications for the
iPhone are in fact video games.
The store, however, is being met by a wary eye from some developers. Some
are concerned that their applications -- say web browsers or music services -- might
be disallowed by Apple as they would compete with Apple staples such as
iTunes. Thus far, Apple has been rather liberal in its allowances, unlike
many phone companies, but this may change. Mywaves, an ad-sponsored free
mobile video service which would compete with iTunes video already has received
a bit of a cold shoulder. Mr. Jobs acknowledged this, but indicated that
talks would continue.
Also, while Apple's distribution may be more streamlined than its competitors,
its competitors still have more developers and more software despite being more
says it has 30,000 software developers writing for its products, while
Microsoft boasts that its Windows Mobile OS has 18,000 applications, available
on 160 carriers worldwide.
Despite this adversity, the iPhone App store seems likely to succeed, perhaps
thanks to Apple's marketing mystique. Says Gene Munster, a senior
research analyst at Piper Jaffray, "Everybody wants to build an iPhone
app. It’s pretty rare you hear things like this. The enthusiasm is
How serious is the new store? Matt Murphy, a partner in a fund set up by
Kleiner Perkins Caufield & Byers is directing a $100M USD fund to invest in
iPhone developer startups. Of 2,000 ideas submitted, his firm is
seriously considering backing 100 of them.
Some of the applications it supports are rather exotic. The iControl
Networks proposal will allow homeowners to turn off their lights and alarms and
watch security cameras -- all from their iPhone, remotely.
With the variety of options and strong interest and investment capitol the App
Store seems poised to make a unique splash in the phone and music player
industries. It marks a new chapter for Apple's style of developer
interactions. And it marks perhaps one of the strongest features of the
already popular iPhone, yet.