App store dirty secret – 95% of downloads are free

apple-billion-appsAs the iPhone App store gold rush continues, it is interesting to ask how much money is being generated from the platform’s 30 000 + apps and 60 000 + developers. Apple recently announced a billion apps have been sold, and analysts have estimated the platform would generate $1.2 billion for Apple in App sales in 2009.

A new analysis indicated the situation is not quite as rosy. 75% of applications are for a fee, from developers hoping to strike it rich, but it seems the vast majority of the billion apps downloaded have been free. The ratio is hotly debated, but a range of 1:10 to 1:20 is generally agreed, with some speculation a ratio as low as 1:40, leaving only between 50 to 100 million apps actually being sold for a fee.

Recent surveys have shown an average cost of for fee apps only being $2.65, with the median being lower. This means the 60 000 developers have generated between $132.5 million and $265 million, with Apple taking 30 % of this.

This means on average, on the lower end of the scale, each developer only earned $3,091 per app, hardly a living wage or enough to build a business on when the app may have taken 3 to 6 months or more to develop.

Of course we know the reality is in fact that a very small minority of companies will get the lion share of the money, while the vast majority earn only a few hundred, if that, for their efforts.

Which of course brings me to the point of this article – how it applies to Windows Mobile.

Developers contemplating which mobile platform to develop for should resist being seduced by headline numbers like 1 billion downloads. With applications on the Windows Mobile platform having average selling prices as much as ten times higher than on the iPhone developers should be asking themselves serious questions about which platform have the greatest potential for recouping their development costs and actually earning them a living.