Apple charges a simple 30% commission on the sale of every iPhone app from its App Store. Would that make a lot of money? According to Toni Sacconaghi, analyst at Bernstein Research, the answer to the question is a “Yes” though it might significant enough if you compare it with Apple’s overall finances. He says that Apple should in fact be making millions from the sale of iPhone apps on the iPhone App Store.
In a new study published by Bernstein Research, Toni argues that Apple has had a terrific first mover advantage in jumping in on the app economy. His study has been basically through secondary research though it forms an educated guess into what Apple must be making. A recent statement from Apple had revealed that close to 1.8 billion iPhone apps have been downloaded to date. With an estimated 13%-21% of all downloaded iPhone apps being paid ones, and with the average price of the app at $3, Toni estimates that the Apple should be making close to anywhere between $60 million to $110 million in revenues every quarter besides earning an estimated $140 million to $250 million for the developers of these apps.
This is not an audacious estimate by any stretch. AdMob, the mobile advertising firm, had earlier this year published a similar study which estimated that the apps contributed close to 2.2% of all revenues for Apple in 2008. The new study from Bernstein pulls it down to 1.14%. Nevertheless, according to this new study, the App Store should be contributing close to 2-4 cents per share every quarter. The App Store has risen to these numbers in just over a year, while the iTunes store took double the time to reach the same level.
The numbers are not surprising. We had written about the soaring revenues from the App Store months after its launch. The App Store has definitely been one of the success stories from Apple in the past few years something that has redefined how the smartphone economy works. But what is interesting here is that the revenues only reveal the tangible part of the story. The availability of thousands of iPhone apps on the App Store has also been a reason why so many people flock to buy iPhones over other smartphones. This is something that has helped Apple create a market barrier which competitors will now find difficult to penetrate through technological brilliance alone.