Comments on: The Great iPhone App Store Profit Debate

By: iPhoneTeacher

iPhoneTeacher — Wed, 10 Jun 2009 13:18:39 +0000

Tipping of developers here … there are other ways to make money with your knowledge of iphone programming. Basically, its risky currently to develop and put up your app on the appstore unless your app/game is unique. A quick way to get the cash flow coming in, is to join and bid on project bidding sites like Elance and RentaCoder. The number of iPhone apps there is mushrooming by the day… and you can make a good packet if you bid and win projects there.

By: Rene Ritchie

Rene Ritchie — Sat, 16 May 2009 01:21:47 +0000

Well, if you want to use Visual Studio, you have to run Windows, so having to run OS X to use Xcode is no different, but the iPhone gives Apple a second bite at the developer… um… apple, so to speak

By: ArtSpot

ArtSpot — Fri, 15 May 2009 22:57:29 +0000

Of course there is also the added “profit” of having developers buying Macs & writing code for the Apple universe instead of having them write for other platforms.

By: icebike

icebike — Fri, 15 May 2009 22:38:47 +0000

I didn’t think Rene was doing a “complete” study. Did I miss something?

Yeah, you missed the part where Rene was simply reporting on a study by Venture Partners, not doing a study himself.

By: Blake 2

Blake 2 — Fri, 15 May 2009 21:32:11 +0000

I didn’t think Rene was doing a “complete” study. Did I miss something?

By: Earless puppy

Earless puppy — Fri, 15 May 2009 20:50:44 +0000

this report forgot to include a few things, but especially the yearly developer fee and the upcoming increase with the new subscription model… Also the App Store has lead to more iPhone sales which is indirect sales for Apple also.. I hate incomplete studies….

By: icebike

icebike — Fri, 15 May 2009 20:04:15 +0000

If it were 20 million:

Since the estimates are for REVENUE, and do not factor in COSTS, 20 million would still represent a significant profit.

Factor in the cost of App review, presumably done by some automated code scan, followed by a cursory review by fairly ignorant Soccer Moms who can't distinguish web content from app content.

You have to pay these people. Even low paid employees cost 40 or 50 thousand a year (salary, benefits, office space, equipment).

Given the volume of app review and approval I'm guessing there must be at least 40 people involved, reviewers, managers, staff, gofers.

2 million in round bald numbers, more likely 3 mil.

Then you have to manage the App Store, equip it, keep the web site up and running. Even if this is mostly automated and database driven there must have been new-hiring above and beyond what iTunes store required, so factor in another 20 high paid tech types.

Another 2 Million.

Sure they get computers at a discount, but still, there is a cost. Assume a (modest) farm of at least 250 machines to handle app store alone, above and beyond what iTunes store already used, Plus rack space, power, cooling, repairs, networking, etc.

Another 2 or 4 million.

Add in Billing, and customer service. Mostly Automated, for sure, but still there has to be a staff of 10 handling the odd complaints, credit card fraud issues, etc.

Another 1 million.

That leaves 10 million profit.

I'm sure I underestimate costs of the corporate world, but I think the app store could lose money and still make money in phone sales.

By: Al

Al — Fri, 15 May 2009 19:59:16 +0000

$45 mil is no small potatoes when you consider the fact that Apple is getting this money essentially for doing nothing. It’s a great business model because they put this app store out there and now developers are working to make money for Apple (as well as themselves). Apple can sit back and watch the app store bank money for them. Brilliant!