The incredible business of iPhone Apps

The joke was in questionable taste. Her name was Baby Shaker, the baby shaker. The principle was as simple as preparing a bottle at. 3 in the morning. We clicked on the icon for his iPhone, and penetrating cries from infants cascaded out of the device. To make them stop, there is only one solution: Shake the phone until it stops. Child welfare associations did not appreciate. And in a disaster, Baby Shaker was withdrawn from the catalog of applications that Apple offers to owners of its high-tech device. A failure that is an exception.

After all, the success of the App Store since offering these “apps,” as insiders say, is overwhelming. At the restaurant or at school, in a meeting or on the train, between old friends or strangers, the scene has become commonplace: one iPhone owner meets another. And hop, they go to compare their software, like two collectors of old stamps. “And Orange TV, do you have it? It’s amazing, I have all the TNT channels live! “No, but I just downloaded Avertinoo. Look, it records all speed cameras, including mobile.”

The interview can last for hours as there are already 35,000 applications. Playful (poker, Scrabble, etc.) and serious (the annals on math from high school graduation S), practical (currency converter) and crazy, such as those who turn the phone into a virtual lighter – ideal for concerts – or into a pillow whoopee. There is also something for every budget. Some free, others barely paid (0.79 euros), and even a little expensive (almost 15 euros).

Bis repeated. As it had already done for music with the iTunes platform, Steve Jobs’ company has created a new business that it intends to rule over. Today, the turnover from software sales is 330 million euros annually. According to the company Strategy Analytics, this is only the beginning: the number of applications should actually increase to 70,000 within four years. As for iPhone owners, they had to triple in a year to reach 45 million by the end of the year.

It all started a year ago with the creation of the App Store. It was the first time a phone manufacturer launched its own online store. Overnight, the swarm of applications, very simple to download, became the main selling point of the iPhone.

“That’s how it conquered the general public, while other smartphones remain limited to professional and techno fans,” said Laurent Geffroy of Greenwich Consulting. This success nonetheless arouses envy: Google, Nokia and BlackBerry have just opened their online store, and in September they will be followed by Microsoft and Palm.

But Apple has taken a good lead. Its software launch factory runs at full capacity without requiring large investments. The brand is actually happy to sell developers (from 79 euros for small independent to 229 euros for large publishers) a sophisticated programming set. A kind of Lego box whose bricks (3D sound and image interface, GPS, motion detector) make it possible to build software compatible with the iPhone fairly quickly. Once finished, they are sent to Apple for approval and live within one to two weeks.

“Everyone has a chance. Unlike other brands, they do not make a selection,” cheers a French developer. A little anyway: the American rejects any X application, or even just a little cheeky.
Apart from this cautious caveat, Apple makes every effort to encourage publishers to work for it and thereby enrich its offering. If the latter decides that their application will be paid, he gives them 70% of the revenue. “Before the iPhone, the distribution of applications was provided by mobile phone operators, who took a commission down the road and therefore paid less well to the authors,” explains Jeff Clavier, a French venture capitalist based in Silicon Valley. By removing this middleman, Apple has raised calls. With the iPhone software update expected in June, more will definitely come to light, as it will now be possible to charge for services, in addition to purchasing the app itself. An extra game level e.g. And of course, Apple will continue to take its 30% tithe on these transactions.

Among the myriad of independents who have already tried their luck, some have already experienced a success story. The best known is Ethan Nicholas. This 30-year-old computer scientist, formerly of Sun Microsystems, won nearly 700,000 euros with iShoot, a war game designed in his spare time. The story of the Frenchman Frédéric Descamps, 43, is similar. An astrophysicist with a passion for computers, he devoted his evenings and weekends for three months to working at Starmap, a planetarium that recognizes the stars above your head. Immediate success: 60,000 copies sold worldwide, for 10 euros each. “3 euros for Apple, 7 euros for me, or almost 200,000 euros in net profit, after tax”, calculates this Grenoble resident, who admits to living “an adventure” but keeps his feet on the ground. “To make it my full-time job, I would need one successful product a year. Not easy,” he explains.

In fact, if some Sunday programmers hit the jackpot, few professionals manage to be profitable at the moment. Check out Tapulous, a Palo Alto startup that created the world’s most downloaded game, app blockbuster, Tap Tap Revenge. However, this company with ten employees will at best only go into balance in 2010. It must be said that Tap Tap Revenge is currently free. Like three-quarters of iPhone software. This is especially true for those developed by the big names on the Internet (such as Facebook, MySpace or, for France, PagesJaunes).

For these multinational companies, which have long depreciated their products, it does not cost much to adapt to the iPhone: between 20,000 and 40,000 euros. Anyway. Even for them, the question remains open: how to make money with “apps”? Expert surveys and specialized blogs multiply to share solutions. First option: to offer a light and free version (“lite” in the language of the editors), which serves as bait against a more sophisticated and paying version. This is the one chosen by many game publishers.

Second option: advertising. In the newspaper “Le Monde”, number 1 for information about the iPhone in France, the management, which is biting its fingers for not having charged payment for its application, hopes to catch up with the sale by selling banners for 5,000 euros a week. In May, for example, Cartier was among the newspaper’s advertisers. “Many top-of-the-range brands are interested in this new media support, which is targeted at a more affluent clientele than the Internet,” confirms Prylos, a mobile marketing specialist.

However, some experts predict that iPhone applications will run out of steam. First, because hackers have already found a way to “jailbreak” the device, that is, break the security that prevents the download of applications on a platform other than the App Store. These hackers can go to Cydia, a competing store created by a California student where everything is free. Moreover, the more the catalog grows, the harder it is to stand out. “Either the program is discovered by Apple because its teams find it successful and original, and it is featured on their website, or it has every opportunity to go unnoticed,” analyzes Jean-Yves Hepp, inventor of iDélices – 100 Cooking Recipes .

In the starting blocks, of course, iPhone’s competitors want to exploit its weaknesses. For example, Google leverages its know-how to offer users a more powerful application search engine. And BlackBerry is declaring a price war by offering to donate 80% of the recipes to developers, or 10% more than Apple. Finally, Nokia belly dances to operators by promising them a commission on sales if they highlight its devices. In short, the application world has not yet found a profitable business model, but everyone is in a hurry. Does it not remind you of anything?

Caroline Michael

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