AppleInsider has a curious pair of analyst reports contrasting profits and pitfalls from the iPhone App Store—curious because it's the same analyst. Gene Munster of Piper Jaffray issued a research note suggesting the App Store could generate more than a billion dollars for Apple by the end of 2009. While it's a guessing game on everything from iPhones sold to active users, Munster makes the case that iPhone users are more likely to become App Store shoppers.
"Mobile service adoption rates show that iPhone owners are more sophisticated mobile users, likely a result of both the user profile and the device itself," the analyst told clients. "The bottom line is that we expect similar adoption of the App Store to other advanced services."
As the chart shows, it all comes down to how many iPhone and iPod touch owners buy applications, but even neutral projections show impressive numbers. By the end of 2009, Munster assumes nearly 80 million handheld users will buy one $10 application and download one free application. This would create a market of more than three-quarter of a billion dollars and generate a little less than a quarter of a billion dollars for Apple. It sounds great—unless, of course, a lot of scruffy hippies spoil it by releasing free applications.
Walking around at WWDC, Munster spoke with an admittedly small number of developers, 20, but what they had to say was a little startling. Munster "found the average cost of iPhone apps on the App Store to be $2.29, with 71 percent being free." Obviously, projections and chit-chat from WWDC are hardly indicative of anything. However, this does offer an explanation regarding the alleged pressuring of developers to monetize their software. Apple gets 30 percent of every sale, but even a CEO who dropped out of college can do the math on the percentage back on "free." It wouldn't be at all surprising if Apple moved away from applications that want to be free after the App Store inevitably succeeds.
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