Apple Inc. (NASDAQ:AAPL) opened up their App Store to iPod Touch and iPhone users about a month ago. App Store users have downloaded over 60 million applications within the last month. Although most of the applications downloaded were free, Apple capitalized nicely on the paid applications. Applications sold over the last month was roughly $1 million per day, thus adding up to $30 million so far.
“This thing’s going to crest a half a billion, soon,” stated Apple CEO Steve Jobs. “Who knows, maybe it will be a $1 billion marketplace at some point in time [WSJ].”
The App Store has had it’s fair share of controversy over the last month. Some of the applications were removed without explanation. Many of the applications had bugs and needed immediate patches.
How much will Apple profit from App Store revenues? Not much… yet. Apple makes about 30% of all paid applications and gives 70% to the application developers. From the $10 million that Apple keeps from application sales, it gives them enough to cover credit-card transaction expenses, bandwidth costs, and other expenses to keep the App Store running.
“Phone differentiation used to be about radios and antennas and things like that,” added Jobs. “We think, going forward, the phone of the future will be differentiated by software.”
Even SEGA Corporation is reaping the benefits of selling applications on the App Store. SEGA’s Super Monkeyball sold 300,000 copies at a price of $9.99 in 20 days.
Armin Heinrich made a $999.99 application called “I Am Rich.” Apple made a “judgement call” and removed the application from their App Store. One App Store user accidentally downloaded the application and contacted Apple constantly to try and get a refund.
The App Store is continuously growing. The App Store has the benefit of being one of the first to the mobile phone application market. Google Android will have some difficulty gaining in traction as they prepare to launch.