2009 Year in Review: The App Store grows bigger, more lucrative and more problematic

Apple's App Store continues to redefine how mobile software is marketed and sold. Consumers are now downloading more than 100 million iPhone and iPod touch applications each month from the App Store according to data issued in mid-November by mobile advertising network Millennial Media and mobile ad exchange Mobclix--the iPhone platform now generates more than five times the number of downloads as Google's Android operating system (20 million application downloads per month) and virtually obliterates Research In Motion's BlackBerry OS (300,000 downloads per month). Apple users average 11 application downloads per month, approximately three times the average number downloaded by Android users and six times the BlackBerry user average. Of the more than 2 billion iPhone and iPod touch applications downloaded since the App Store opened in mid-2008, about 30 percent--approximately 610 million--fall into the premium app category, translating to total developer revenues of $900 million, according to iPhone analytics firm Pinch Media. And there's no end in sight: Consumer traffic to the App Store increased 57 percent during Thanksgiving week compared to the same period in 2008, Mobclix reports.

But the App Store also remains a lightning rod for controversy. Apple's mysterious and often perplexing approval policies drew the attention of the Federal Communications Commission following the computing giant's decision to remove a pair of third-party Google Voice applications and reject Google's own VoIP client. Apple later explained that Google Voice was not banned outright and is still under review, but the firestorm is widely considered a catalyst behind FCC Chairman Julius Genachowski's call to implement net neutrality principles across the Web and mobile platforms. The FCC inquiry also yielded significant new insight into the App Store review process: In mid-August, Apple told lawmakers it employs about 40 full-time, trained application reviewers--the App Store receives about 8,500 new app submissions and updates each week, which translates to 212 apps per reviewer per week. Except Apple reports that all apps are subject to approval by two different reviewers, so that number doubles to 424 apps per staffer each week--assuming reviewers work the standard eight-hour day, that means each app is approved or rejected in the span of about six minutes. (Apple recently said the number of App Store submissions now tops 10,000 per week, but did not indicate whether it expanded its review staff or revamped the review process in response.)

Some developers have had enough. In mid-November, Facebook developer Joe Hewitt made a public vow to quit developing for the iPhone, blaming Apple's approval policies. "Time for me to try something new," Hewitt wrote on his Twitter page. "I've handed the Facebook iPhone app off to another engineer, and I'm onto a new project." TechCrunch reached out to Hewitt to clarify his comments, and he said "My decision to stop iPhone development has had everything to do with Apple's policies. I respect their right to manage their platform however they want, however I am philosophically opposed to the existence of their review process. I am very concerned that they are setting a horrible precedent for other software platforms, and soon gatekeepers will start infesting the lives of every software developer." Soon after, Paul Kafasis--a developer with noted Mac software maker Rogue Amoeba--also turned his back on the iPhone platform after an updated version of the firm's Airfoil Speakers Touch app spent over three and a half months lingering in approval purgatory. "We wanted to ship a simple bug fix, and it took almost four months of slow replies, delays, and dithering by Apple," Kafasis wrote on the Rogue Amoeba blog. "All the while, our buggy [version] was still available. There's no other word for that but ‘broken.'"

To be fair, Apple continues tinkering with the App Store, and in mid-September added a new Top Grossing Apps category to the storefront's homepage alongside its existing Top Paid Apps and Top Free Apps countdowns, ranking iPhone and iPod touch applications according to revenue totals instead of download volumes. Apple did not officially comment on the Top Grossing Apps category, but it seems safe to assume the countdown is a response to mounting criticisms that it's virtually impossible for pricier, more complex applications to stand out amidst the deluge of bargain-basement 99-cent apps. Big-ticket downloads like Navigon AG's MobileNavigator North America ($89.99), TomTom International's TomTom U.S. & Canada ($99.99) and Shotzoom's Software's Golfshot: Golf GPS ($29.99) all are beneficiaries of the change--without a Top Grossing list, it's unlikely these kinds of pricier apps would ever enjoy the visibility and sales push that comes with marquee App Store placement.

As of December 2009, games remain the App Store's dominant content category, exceeding 22,000 titles in all and representing close to 20 percent of all iPhone and iPod touch applications. A smartphone user study conducted in mid-2009 by web research firm Compete indicates that 79 percent of iPhone owners have downloaded a game from the App Store--entertainment applications are close behind at 78 percent, followed by weather (57 percent) and music (55 percent). Mobile and portable game sales are now anticipated to reach $11.7 billion worldwide in 2014 according to research firm DFC Intelligence, which contends that iPhone and iPod touch devices will together account for about 24 percent of total portable game sales five years from now. But watch out for books, which represented one out of every five new iPhone and iPod touch apps launched in October 2009 according to in-application analytics provider Flurry.  After games led all iPhone app development categories between August 2008 and August 2009, books first usurped the top position in September of this year, Flurry reports--the firm adds that in August, 1 percent of the entire U.S. population was reading a book on the iPhone.