After 100,000 applications, what's next for the App Store?

The App Store officially topped [1] the 100,000 iPhone and iPod touch application milestone this week, and for Apple, the timing couldn't have been more advantageous. Given how much the spotlight has shifted away from the iPhone to Motorola's Droid and the Android platform's viability as a threat to the iPhone's dominance, Apple's announcement underscores just how far ahead of the smartphone competition the company remains--according to Fortune's Apple 2.0 [2] blog, Android Market offers fewer than 12,000 applications, and BlackBerry App World carries a little over 3,000.

While games is still the leading App Store content category, representing about 16 percent of all iPhone applications according to iPhone metrics resource 148Apps.biz [3], books now represent one of every five new App Store entries. In-application analytics provider Flurry [4] reports that while games led all iPhone app development categories between August 2008 and August 2009, books usurped the top position in September of this year, adding that in August, 1 percent of the entire U.S. population was reading a book on the iPhone--Flurry adds that games slipped to about 13 percent of new iPhone applications released last month, down from 17 percent in July 2009. With so many publishers porting content to the App Store, Flurry forecasts that Apple is now positioned to claim ebook market share from Amazon's Kindle ereader device, especially given the pending release of a larger tablet form factor that will run on the iPhone operating system.

148Apps.biz statistics indicate that premium applications now make up slightly more than 75 percent of the App Store's total inventory--99-cent apps alone represent roughly 42 percent of the storefront. However, of the more than 2 billion applications downloaded since the App Store opened in mid-2008, only about 30 percent fall into the premium category, translating to total developer revenues of $900 million according to iPhone analytics firm Pinch Media. Although Pinch findings indicate that premium App Store downloads average $12,100 in revenue ($8,500 net to the developer after Apple takes its cut), the firm is quick to point out that the arithmetic can be misleading because the most popular applications generate a very disproportionate percentage of sales: A small segment of developers earn substantially more than $8,500 per app, but most make far less. It took the App Store fewer than 18 months to reach 100,000 applications, but the next 100,000 could take far longer if developers determine that the economics of creating iPhone apps no longer make sense. That--not the Droid, or any other device--poses the real threat to Apple's run at the top. -Jason [5]