iPhone App Store $2.5 Billion a Year Business?

paid application market size estimate

Does the App Store represent a $2.5 billion a year economy, with 26.4 million iPhone users, 50% of whom pay for apps to the tune of $9.49 a month, or $125 million in August alone? That's the story AdMob's latest figures (via GigaOm) are telling, with 26.4 million iPod touch users, at 40% who pay, averaging $9.79 or $73 million rounding out Apple's mobile platform.

Some other interesting metrics include iPhone users downloading 10 new apps a month, 18 for iPod touch. 8 apps are freebies for the iPhone'rs, 16 for iPod touch'ies.

Any wonder everyone and their carrier is trying to get into the App Store game?


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Rene Ritchie

EiC of iMore, EP of Mobile Nations, Apple analyst, co-host of Debug, Iterate, Vector, Review, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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Reader comments

iPhone App Store $2.5 Billion a Year Business?


It's essentially free money too since Apple doesn't write any of the software. This also doesn't include the ridiculous developer kit fees the charge to the developers who are making all this fat cash for them...

Joe McG don't forget this is the total, it's not just apple's cut. So that 125mil should be 37.5 that apple made for the hosting and distribution of these apps and that allows the developer not to have to pay those costs

Stop with the question marks as a headline! I feel like I'm living in that Seinfeld episode..
"Blogs to start using question marks when data is undeterminable or indefinite?"
"Are fruit flies really g.ay?"
"Are Latin Americans trying to bring back the dead language?"

Or, perhaps a slightly less tendentious way to look at it is that the relationship between Apple and developers is symbiotic. Apple has development, distribution and advertising costs that have to be covered and is delivering a vast and growing market into the hands of the developers, some of whom seem to be making a lot of money even as their apps make the iPhone platform more profitable for Apple. How many small developers ever had their apps show up in a slick national advertising campaign before the iPhone? 70% of $2.5 billion to developers? No wonder so many have chosen to be exploited.

I understand the difference between sales and margin...
I say we sneak into Rene's house and pry off his question mark key...

I love that exclamation point episode! Especially how Elaine tried to exact her revenge with overuse of them! Hilarious!
@Joe McG..that might be a tough one to pull off, he may need it in the future though. I say we just launch an Internet campaign to poke fun at all the blogs that do this with zany titles that can be used to suggest anything (Fox News does it, therefore it must be a legitimate technique for reporting).
"iPhone radio's giving Australians mutant powers?"

Should be even more money, cause don't forget compared to Android, Apple pays the developers once per month, which means they most likely get interest while money are in the bank account. double win!

I've had all 3 iPhones and NEVER spent $1.00 on an app. I have 74 free ones. But I never have more that 5-6 installed at one time

I seriously doubt these numbers.]

pay for apps to the tune of $9.49 a month

Perhaps in the first three months. But if personal experience and the experience of my friends and co-workers is any guide you quickly stabilize around a core set of apps and you don't buy that much going forward.
I suppose a teen ager with dad's credit card might buy a new game every day, and make up for a lot of people that can go weeks without a visit to the App store.

I know that it is hard for sensible people like us to think of somebody blowing so much money on stupid little games, but I had friends in college that got screaming phone calls from their parents because they racked up $75 in ringtone / game downloads on their phone. Now, this was way before the iPhone, but there are stupid people out there that do this sort of thing.

The commenters over at GigaOm are tearing this story up too. the say the math is incorrect and AdMob is buggin by assuming the average price of an app is that high.

The Cult of the Mac Blog is calling BS on this 2.5 Billion number after surveying several successful developers.
David Barnard of App Cubby, a developer based in Austin, Texas, says:
“I’ve spoken with other developers who have apps in the top 100 lists of various other categories,” he says. “My rough, but informed estimation: The App Store grosses between $250 and $500 million per year.”