UPDATED: The Apple App Store Economy

105 Comments

Update: Thanks to everyone for weighing in about the infographic. The data used was given to us on an exclusive basis from analytics firm Flurry. Indeed, three-quarters of the apps in the App Store are “paid apps,” which was used to calculate the average app price and the subsequent revenue figures in the previous version. However, only one-quarter of the apps actually downloaded are “paid apps,” so the average price per transaction (paid + free downloads) is actually much lower than the average app price in the store. The graphic has been updated to reflect this price. Also, some of the averages in the Flurry data were calculated using projected user numbers from the first quarter 2010; that has been corrected to reflect only data up to the end of the year.

For clarification purposes, here is the math:

According to Flurry, Average listed price of a paid app: $3.63

74% of apps listed in the app store are paid.
Average listed price of an app (including free): 3.63 x .74 = 2.70 (with rounding)

Only 1/4 of downloaded apps are paid.
Average price paid for  an app (including free): 3.63 X .25 = .91

While we make every effort to ensure the accuracy of all the information contained in our posts, sometimes errors make their way onto our site, and this was one of them. We deeply regret any confusion this may have caused. Please accept our apologies.

best, Om

[digg=http://digg.com/apple/Apple_The_App_Store_Economy_INFOGRAPHIC]

Related GigaOM Pro Research Report: Surveying the Mobile App Store Landscape

Graphic courtesy of Column Five Media

105 Comments

הבלוג GigaOm מפרסם היום אינפוגרפיקה מעניינת על ×” APPSTORE « אייפון ישראל – חד

[…] למעבר לאינפוגרפיקה לחצו כאן Categories: 1 תגים:appstore, אפל, כלכלה תגובות (0) טראקבאקים (0) כתיבת תגובה טראקבאק […]

Cómo funciona la App Store - Delete… All

[…] Por Delete All en Jan.13, 2010, bajo Varios Gracias a esta gráfica podemos entender un poco más el modelo de negocio que Apple forjó con su App Store, y ver más claramente lo que muchos se niegan a entender: el verdadero dinero está en las aplicaciones, más que en vender iPhones. Visto en Gigaom […]

iFUN.de/iPhone :: Alles zum iPhone − Infografik zur AppStore Economy - Zahlen zum Marktstart des Nexus One

[…] Gigaom hat die in den letzten Tagen zu Hauf veröffentlichten Zahlen zum iPhone, dem AppStore und dem Kaufverhalten der iPhone-Besitzer in eine übersichtliche Infografik gegossen und das 4200 Pixel lange Bild hier veröffentlicht. Die Grafik ist – vor allem für all jene unter euch, denen die Statistiken üblicherweise eher auf den Keks gehen – definitiv einen Kick wert. […]

AbhishekB

The developer figure is interesting. I wonder though how many of them simply built something quick, threw it in the AppStore and hoped for the best.

Just like every business iPhone app development requires a long term and end-to-end strategy.

Great post though.

Devan Sabaratnam

According to this, iPhone developers are earning an average of $12,500.00 per month from App Store sales. Nice little earner – that works out to $150,000 per year.

However, I think the real numbers are skewed somewhat, as we hear of a handful earning over $1m per year, and LOTS of smaller dev shops earning a pittance (i.e. a few hundred dollars) per year.

Stupid Irishman

Consider this: each “developer” registered with Apple most likely has several submitting under the same developer account. Unless you are in the top of that bell curve for earnings distribution, you are not making much at all & that is most cases.

A S

Numbers don’t compute. Hard to believe. Would someone from Gigaom speak up and explain these figures please?

Stupid Irishman

Dude- if your that interested, then why don’t you get off of your butt & dig into the sources listed? Lazy!

Stan

S.I., The form “your” is possessive. I believe you meant to use the contraction, you’re. Your grammar skills could be up to your numerate skills when you’re (you are) able to differentiate between the two.

Anonymous

Actually Stan you’re wrong. Read again before you try being a smart-ass.

Anonymous

If I was not viewing this page right now on my iPod touch I would be a little outraged!! How many american dollars do you think are leaving the states each day?!?

ian

The numbers for revenues are all wrong. There is no way the app store is generating more than $500mn per month.

From Sept 2009 to Jan 2010, 1bn apps were downloaded according to Apple, both paid and free. That makes to be 71mn paid apps per month (1bn * 0.25 paid apps / 3.5 months). Even assuming $2.59 average price, that makes to be $180mn per month in revenues. AND $2.59 is not a reasonable average price. The $0.99 apps are likely to be downloaded much more than just a simple average of the top 50 apps will show.

Please correct me if I’m wrong. But otherwise, it is shocking irresponsible how anyone can put such numbers up.

Stupid Irishman

Ian:

The 1B figure is September 2008 (not 2009) to January 2010- that’s about 16 months of downloads and revenue. That changes your analysis quite a bit, right? Glass houses, brother… You don’t happen to work for Google, do you?

It would be appropriate to assume $2.59 is the average price for ALL paid app, but $2.59 was the average price for only the “Top 50 Paid Apps” in December.

Stop getting all dramatic about “responsibility” & go back to work. You do have a job, right?

ian

Let me clarify, on 28th Sept 2009, Apple announced 2bn apps downloaded. On 5th Jan 2010, Apple announced 3bn apps downloaded. Between this period from Sept 2009 to Jan 2010, 1bn apps were download (3-2).

This is important to me as I run an iPhone startup. Knowing such numbers is the bread-and-butter of our business.

James Lim

How is it that each iphone/touch users spend $10 per month when users only download less than 1 paid app(a quarter of 3.7 apps) each month? If we round up that the users download 1 paid app each month and the average cost of an paid app is
$2.59, then the average amount the users spend per month should be $2.59 not $10.

Stupid Irishman

Stop doing math before you hurt yourself!

The 3.7 figure is from December, only.

The $10 figure is meta-data covering all months, all users.

iphone developer

Awesome article, great image, and great research. The apple app store is definitely in huge demand right now. Its going to be interesting to watch to grow even more in the future! Also check out http://www.PhoneFreelancer if you have an app idea, its a website connecting entrepreneurs with iphone developers, for free.

Vijay Adusumilli

Sorry, I am missing something here. Are users dowloading 3.7 paid or total number of applications per month? If it is the former, then total number of downloads (4 times paid) for December are 3.7x4x56M = 828.8 million. Towards end of September Apple announced 2 billion downloads and on Jan 5th Apple announced 3 billion downloads. If about 830 million of them were downloaded in December alone, App Store must have really had a very dry period in October and November. What am I missing here?

Frigoa

I am missing something too. Using the data above, the average paid apps cost $2.59. If 75% are free then the average including free would be closer to $0.65, correct?

So the average iPhone user would spend closer to $2.40/month than $10.

Showing my work!:

.9925+1.996+2.998+3.991+4.993+5.992+6.99*4+9.99=129.5

25+6+8+1+3+2+4+1=50

Stupid Irishman

The average paid app does NOT cost $2.59!!!! Your statement implies you mean for ALL PAID APPS. You read it wrong. In DECEMBER, The average price of apps in the “Top 50 Paid Apps” section just happen to be $2.59.

75% of apps are NOT FREE, but 75% of apps downloaded in December happened to be free.

You had to have failed the whole word problem thing back in school, right?

Why did you show your work? All you did was come one step shy of showing what they quoted (129.5/50= $2.59- the average)

Could you please submit all work showing how you arrived at $2.40 per month? I want to include it in my next board meeting. Thanks.

Stupid Irishman

OMG!!!! I just realized that you were even more wrong than I had previously imagined.

The “one quarter” figure (and it’s inverse, naturally) is in no way related to the $2.59 pricing figure. Multiplying them together gives you nothing more than headache. Did you actually read the piece?

Frigoa

Om, Sincere thanks for taking the time to make corrections to the data. Solid info-graphic. Brand win.

Frigoa

Dear Stupid Irishman,

The figure of $2.40/month came from multiplying the number of apps users downloaded in a month by the average cost of an app, which is the average cost of a paid app multiplied by the percentage of downloaded apps that are not free. It is the same math that Om walks through in the update above. The exact numbers are slightly different because the original data provided by the info-graphic was different. The math is the same.

Why did they go to the trouble to change it those of us who suggested the update are all idiots, failing the whole word problem thing back in school, and OMG this and Cheeto that? STFU.

Peter

I would assume total.

To quote the above, “iPhone users downloaded an average of 3.7 apps in December, one quarter of which were paid.”

Of course, the interesting part is that one quarter of 3.7 is 0.925. We’ll be nice and round that up to 1. So everybody bought an App in December. They spend $10 a month, but the average price for an App is $2.70?

I think we might need to consider not using “averages” here. I’d love to see what the deviation is. We might want to consider using a mean or median. Do we have 1% of the customers downloading everything that’s not nailed down and the other 99% downloading very little?

Stupid Irishman

Peter- you sound like a smart dude. Let me run this by you:

First, the $10 figure is meta-data- all months averaged for all consumers of all app store products.

Second, the average price quoted in the piece was only for what was in the “Top 50 Paid Apps” section of the itunes app store (it was quoted as $2.59, not $2.70).

Why would you draw a correlation between two disparate phenomena? Also- what does deviation do for you in this story? All they are trying to do is show how kick-butt and popular the technology is. What’s the big deal?

Ben Phelps

3.7 apps rounded up to 4
$2.56 per app rounded up to $2.6
comes to a grand total of
$10.4 rounded down to $10

The problem here is that the math continues on with all four of the apps being paid, and not just the one.

The proper math would be:
125 Million in Revenue Each Moth with
37.5 Million to Apple (30%)
87.5 Million to Developers (70%)
$1,500,000,000 Each Year on iPhone Apps

edrifter

Good math but remember your pick December as your base month, not a good prediction of your full year. All those iTunes gift cards in stockings might be tilting the table.

TooFineAPoint

Your point may be absolutely right, but I would like to see the forest here rather than trees.

With due respect, by the time your calcs get done, the #s change. So the larger point is apple makes apprx $150 revenue/month ($500M x 30%). Take costs out and lets say they make (profits( of $100M/month = $1.2B/year + growth. Very decent #s – almost needle moving in the grand scale of things + incredible platform stickiness (both for users + devs). Thats the point.

Stupid Irishman

BAM! You’ve got it, dude. (except for your agreeing with VJ- he was way screwy in his… quote)

Stupid Irishman

Vijay:
Calm down, big boy. Yes- you are missing something- alot of somethings, actually. Your assumptions are all wrong, so you are making gobs of mistakes in your calculation. Who gives a crap, anyway, though??? And why did you start off by apologizing? That was as weird as my fascination with wanting to reply to you, I guess.

Anyway… I’ll point out the err in your calculation after I point out the first obvious mistake on your part- to use these facts/figures for anything other than what they were meant for: To demonstrate that smartphones are a prolific technology… and maybe that people at Apple think they are really smart marketers.

Listen, Vij- I’m worried about you over here. Take a rest on trying to figure out Apple’s revenue or total download figures or whatever. You sound like some kind of freaked-out conspiracy theorist trying to uncover the next great insider trading scam. You have poor Frioga flippin’ out over her calculator, too! (Sorry, Frioga- I had to say something)

Here goes…

IN DECEMBER, ONLY:
– Of all of the dipsticks who downloaded Apps (not all Apple customers who have ever downloaded an app- JUST the December dipsticks), they averaged 3.7 apps per dipstick.
– They never reported how many dipsticks there actually were in December, so stop trying to guess at it.
– Using a multiplier of 4 to reverse the “one quarter” figure makes you a dipstick, too, by the way.
– The quarter figure was meant by author to apply to the 3.7 figure. Meaning this: Every dipstick in December who downloaded 3.7 apps downloaded 2.78 free apps and .92 paid apps. Now do you see why multiplying 3.7 by 4 is really stupid and irrelevant? Hope so…
– The 56M figure is a TOTAL CUSTOMERS of the appstore since the biginning of appstore time. Again- they never reported quantity of December-only customers. This is your largest calculation mistake: combining facts/figures that aren’t related to each other. You are making me feel like a complete NERD in having to explain this to you… and now I’m starting to feel idiotic for even entertaining your question. (DAMN my obsessive-compulsive need to correct idiots) :-(
– The billions of downloads figure (though never reported in this piece, but since you referenced it, and it feels fun to explain… I will). This number you read about in the National Inquirer refers to the number of TOTAL APP DOWNLOADS since they started offering app downloads a year and a half ago.
– I am so PISSED that I spent all of this time replying to you. Please don’t ask any more questions so I don’t get sucked in.

p.s.- Frioga got it all wrong, too, so don’t feel bad.

Dan Burke

I really loved the data and the display of this report! Thanks for being so cool.

Michelle

Wow! what a great way of showing the potential, well done! You guys should check out http://www.appboy.com too they have done a great job of helping developers get discovered.

Comments are closed.