Tuesday’s blog post from Paul on Widgets and Apps got me looking around at the economics of apps. My question was: What are apps displacing? And by inference: Does that make for a sustainable business?
“Dude, do you work at Nintendo? Do you have a corner office at Sony’s offices in Minato, Tokyo? Good. Time to get up out of your chair, walk to the nearest fire alarm and yank it. Now, run screaming out of the building.
Because if what Apple ( AAPL – news – people ) announced today hasn’t woken you and your colleagues up, it’s time to have your executive assistant pencil “panic” into your FranklinCovey day planner.
Here’s the news. Apple announced Monday that users have downloaded more than 2 billion apps through its App Store. That’s the service Apple users to distribute applications from software developers to anyone with an iPhone or iPod Touch. Of the 85,000 applications available through the App Store, something like 80% are free. More than 21,000 of them are games.
Worse, of the 100 most popular apps, a mere 7% cost money.”
The article also points out that a Nintendo handheld game can cost $26.00 – here in Europe it is as likely to cost Euro 39.00. On a mobile the cost will be $3.00 maximum. What’s more it cuts out retailers and all those airport kiosks making a nice income from music and games.
The article was also covered in a newsletter from Matt Johnson of uTest who concludes:
“As bright as the future looks for iPhone app developers, it looks equally abysmal for many traditional firms.”
Where this leads, I think, is we need to conclude we don’t understand apps economics. We don’t know how many (the majority of) apps’ builders are getting by and what their business models are. We don’t know what the impact of apps is, we don’t know what they are taking attention and revenue away from. And we don’t know what a sustainable sector will look like.
Like many areas of the free, and free-to-premium economy and its near cousin the peer-to-peer economy – we really don’t understand – and yet when you see 2 billion interactions with a consumer base you wonder would the garment, apparel, sport or in fact any other industry allow itself to live with that kind of ignorance?
UPDATE: This below is a quote from an article sent to me by Lars:
This week, Apple announced that there have been 2 billion downloads from the App Store, which now has more than 85,000 applications. The number is humongous and quite simply unbelievable. Apple has shipped about 50 million App Store capable devices (including iPod touch). Assuming they’re all in use, that works out to 40 applications per device.








