Apps are the new Singles: Betting on AppStore Revenue

Steve Jobs still hasn’t announced the App Store for Mac.

Referring to the iPhone App Store, analyst Gene Munster at Piper Jaffray estimates that Apple’s App Store could emerge as $1.2B business by 2009. Is that too low? Focusing on revenue per user, his most aggressive estimate looks conservative to me.

Look out, because the App is the new Single.

The apps that have already been shown (and those yet to be developed) are cool. People will want to try many of them before settling on the ones they continue to use. Good thing it will be easy to discover, purchase and install them. $15 in average app revenue per phone seems paltry, even if 70% of iPhone apps are free.

I think analysts missed it with their first estimates for iTunes revenues, too. They had to keeping upping them for years.

It wasn’t obvious from what was happening at the time in the digital music marketplace how ready the public was to buy from a store (and for a device) that got all the pieces right. You needed to talk to consumers in depth to look past business as usual and understand their unmet needs.

iTunes and iPod are literally the text book example of how user experience as strategy changed an industry in ways the number crunching business analysts couldn’t predict.

In the same way, there are thousands of fantastic uses for mobile technology which no one has been able to discover, develop and sell because the platform for it hasn’t been there. From the developer side, there are too many crippling limitations to development and barriers to sales. For consumers, the devices aren’t easy to use to start with, but finding, paying for and installing is a nightmare on more levels than Dante could describe.

iPhone and its AppStore are game changing because they directly address the total user experience for new mobile applications. This is a bigger change for mobile applications than iTunes was for music.

I remember the days when you bought (or copied) stacks of applications for your computer. There are many reasons we don’t still do that. So we don’t think of wanting to buy lots of small applications. Just as we didn’t used to think of buying lots of music as single songs. App Store might make you think differently. You’ll buy lots of these new singles.

I’m be willing to bet on a significantly higher figure for App Store per user average revenue in 2009. Any takers?

San Jose Mercury News ran a great article by John Bourdreau today about the iPhone economy as Application developers swarm to iPhone with many good quotes and stats.

In response to Forbes IPhone Apps Appeal, which raises many issues about usability, security and quality:

Not every release has to be a hit. User ratings and reviews like in iTunes will make it easier to discover the best apps that enhance the iPhone experience, and avoid those that need improvement. The ease with which they can be found, purchased and installed will make it painless to try several and discard any that you don’t automatically hum along with.

The best will become hits, driven by ratings, blog posts, status messages and more — no payola required (though it still has a leveraging effect to make hits even bigger).

This is a dramatic change. For the first time mobile has a viable ecosystem for new applications.

I predict that more revolution will come to the mobile industry (and to how mobile technology impacts people’s lives) through the App Store than came from the introduction of the iPhone itself.

In response to Apps First to Market will win?:
I think apps will work more like music singles. First to market in a given genre will not be an overwhelming advantage. In fact, releases will be inspired by each other and build on each other. There will be no stigma to having a new favorite next week. Ratings from other listeners, as well as what your friends are listening to, reviewers are writing about, etc., will help you decide what to tune in to.

iPhone Apps Store Growing Twice as Fast as iTunes Music

Ecko's Vote

Bonds may say he’s stupid but I say Ecko’s move is brilliant marketing.

I wonder how much he just decided to do it because it was cool, vs. how much he calculated a likely return on investment.

My bet is that Ecko’s success comes from intuition, that here he doesn’t really care about the cost, and knows he can only guess the benefit. With good instincts, you hit enough home runs with those unpredictable benefits that you have to swing at them. Don’t let bean counters and committees hold you back, because mediocre efforts that take no risks reap no rewards.

(For the record, I voted to bestow it.)

Bonds 756 — From the Fence with Sports Illustrated

Here’s Sports Illustrated photographer Brad Mangin again, this time with his photos of Barry Bonds home number 756. It’s been fun spending so many games in the last few weeks at the fence with Brad and his assistants. (He also shot #755 in San Diego, and many others that are showing up in the magazine and web site.)

I’ve watched more baseball in the last month than I had in the rest of my life, and I’m glad I was able to be there for the fireworks and all the rest… it was amazing.

Barry Bonds 754 — At the Fence with Sports Illustrated

I live near AT&T Park, so from time to time I walk over to enjoy a few innings from the fence. From here, I get to look straight down the first base line. Apparently, I’m not the only one who in enjoys the view, as the Sports Illustrated photographer, his three cameras, remotes and assistant all take up residence. I asked Brad at the beginning of the week if he was shooting anyone but Barry Bonds and he replied “not this week.” I caught a little of the games during the week and then all of Friday, Saturday and Sunday.

Here’s a shot from Friday… Brad has downloaded home run number 754 and is uploading it to SI, and minutes later it was gracing the home page of Taken with my iPhone.

The other shot is Brad on Saturday afternoon.