A ticker on the front of Apple’s Web site rolls over relentlessly, increasing by about 500 a second as it moves relentlessly toward 25 billion.
It is counting the number of units of application software downloaded from the company’s App Store — and the rise of a business that barely existed five years ago, but which now dominates daily conversation so much that the phrase, “There’s an app for that,” has become both an offer of help and a joke.
The counter is expected to hit the target early next month. By then, users will have spent about ￡3.6 billion (US$5.7 billion) buying apps through the store, of which Apple will have passed on ￡2.5 billion and retained ￡1.1 billion. In the final quarter of last year alone, the company paid out more than ￡447 million to developers for sales of their apps — a figure which does not include advertising revenues generated by free apps.
Where once schoolchildren swapped the names of favorite bands, now they can name apps: Angry Birds, Cut The Rope, WhatsApp Messenger, Temple Run, FatBooth.
The App Store contains more than 550,000 apps, some of which have made their authors rich, and many of which have offered a solid source of income for a new breed of business specializing in writing apps to order for clients large and small.
In some cases, it is kids who are writing the apps: Last year Robert Nay, then 14, hit the top of the App Store charts with his game Bubble Ball, which took him only a month to write, but was downloaded millions of times.
“What we’ve seen over the last four years has been nothing but exceptional,” said Matt Miller, cofounder of London studio ustwo, which worked with Barclays bank on its recent Pingit mobile payments app.
“The app industry has taken the world by storm, creating a microeconomy in its own right and creating jobs for hundreds of thousands of talented professionals worldwide. A successful app can now be the difference between complete anonymity and global digital fame,” he said.
Apps are even changing our online shopping habits: More than 65 million people have downloaded eBay’s apps for various devices, spending ￡3.2 billion on the auction service from mobile devices last year. This is expected to rise to ￡5.1 billion this year.
However, even as Apple prepares to celebrate its 25 billion downloads milestone, Google’s Android operating system is coming up on the rail: Despite launching nearly two years later, it has more than 400,000 apps, and in December last year, passed the 10 billion downloads mark.
The late Apple boss Steve Jobs at first resisted the idea of apps — fearful that a malicious app could bring down whole networks and, with it, Apple’s reputation.
It took the combined efforts of Scott Forstall, head of iPhone development, and Phil Schiller, Jobs’s longtime head of marketing, to change the chief’s mind. However, once Jobs announced the change, in October 2007, the floodgates opened.
Just as it did not invent the smartphone or digital music player, Apple did not invent mobile applications. They had been around for years on phones from companies such as Nokia, and personal digital assistant devices from Palm and others. However, they had tended to be awkward to use.
As with the iPod and iPhone, Apple took the clunkiness out to make browsing, buying and downloading simple. And it rebranded the little computer programs as “apps,” complete with catchy slogan and TV ads.
Industry analyst Juniper Research estimates that more than 31 billion apps were downloaded to mobile devices last year and predicts that by 2016, mobile apps will generate US$52 billion in revenues — 75 percent from smartphones and 25 percent from tablets.
Apps, in short, have become a thriving business segment to the biggest companies. They also play a crucial role in many of the business models disrupting established entertainment and media industries. Music service Spotify’s mobile app has been a key factor in its growth, with 85 percent of its 3 million subscribers paying ￡9.99 a month to get mobile as well as desktop access.
Apps have also been important for streaming TV and film services such as Netflix and Hulu, as well as for the BBC’s iPlayer and BSkyB’s Sky Go — the latter attracts 1.5 million unique users a month. The top five free iPad apps are for TV catchup services.
In the games world, apps have been at the forefront of new “freemium” model where games can be played for free, but make their money from in-app purchases of virtual items and currency.
For the best-known app firm —Finland’s Rovio, whose Angry Birds is played even by British Prime Minister David Cameron on his iPad — it’s a huge winner. This year the company expects revenues of up to 400 million euros (US$534.8 million).
Meanwhile, newspapers and magazines hope apps will provide a stable subscription-based revenue stream to make up for declining print sales. UK publisher Future took ￡638,000 in new digital revenues within a month of launching 65 of its magazines as apps on Apple’s Newsstand store.
Yet amid the celebrations for apps, there are some dark clouds. Initially, Apple was criticized for its almost random approach to preventing apps going on sale. More recently there has been unrest from iPhone games developers about blatant “clones” — fakes which look like famous games. Earlier this month a fake Pokemon Yellow app was at one point the third-highest selling game on the App Store. It has since been removed.
Meanwhile, the Android Market is one of the biggest sources of mobile malware, according to studies by antivirus companies, which regularly find apps that will steal data or send pricey text messages. Although Google can yank such apps both from the market and users’ phones, the issue remains a concern for businesses and government.
Nonetheless, apps are here to stay, market researcher Forrester said. In fact, they will become even more embedded in our lives: Entire businesses will revolve around them, both externally (through customer orders) and and internally (as staff use specific apps to get things done).
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