Apple's (AAPL) iPhone Applications Take Root As A Cottage Industry
By:
TraderMark Thursday, November 12, 2009 2:56 PM
Now
this is a genuine green shoot. The
Apple (AAPL) iPhone app store is an incredibly popular place... at least that's what the kids out there tell me. I'm not sure the revenue potential as $1.99 apps are not exactly the same as the birth of $3500 personal computers but I suppose they are more profitable than many of the internet startups who never made a red cent a decade ago. At least we have actual innovation happening in this space.
- There is a hint of that old boomtown feeling again in the Bay Area -- this time in living rooms and garages and cubicles where a cottage industry is unfolding around the iPhone app. Despite the recession, hundreds of start-ups have sprung up in the area since Apple Inc. launched the iPhone two years ago and opened up the device so third-party developers could create games and other software applications for it.
- Apple, which has sold more than 30 million iPhones and 20 million iPod touches, boasts more than 100,000 apps on its App Store, through which people can download games, entertainment and utility applications.
- Most are free -- and make money from ads -- or cost less than a dollar. Developers get 70% of any revenue they make from app sales, with the remaining 30% going to Apple. That is a better proposition than app development for other mobile phones has been in the past. Rivals now offer similar revenue-share models.
- As a result, many Silicon Valley techies have been lured to the iPhone app start-up scene. According to Mobclix Inc., which operates the iPhone's largest ad-exchange network -- a marketplace to connect advertisers and app developers -- 41% of its 4,000 app developers are in Northern California. The region with the second-largest number of app developers is New York-New Jersey, with 14%. (unfortunately, the boom seems quite concentrated)
- "A large concentration of people who are doing (iPhone apps) are Internet entrepreneurs...and a lot of Internet entrepreneurs are in the Valley," said Matt Murphy, who oversees the $100 million iFund, a venture-capital fund run by Kleiner Perkins Caufield & Byers that backs iPhone app developers.
- "This is our dot-com boom," said Samir Shah, 26 years old, a co-founder of Mountain View-based Snapture Labs LLC, which makes a $1.99 camera app that has been one of the top-ranked photography apps since September. Mr. Shah and two other Snapture co-founders graduated from Carnegie Mellon University in Pittsburgh in 2007 and moved to Silicon Valley shortly after.
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