Mr. CEO, members of the developer program, iOS users, and abusers. I have come here today not to only address the great advances of the App Store but to also address the issues.
During the past year the App Store has seen amazing growth. We've seen a quadrupling of the number of applications, downloads, and devices. Since it's inception, the App Store has generated over 1.5 billion dollars in revenue for Apple with over a billion dollars of that going to developers.
The App Store is a unique mobile application market. Apple has done something that no other device manufacturer had done before or since. Not only has Apple developed a common mobile platform delivered across a variety of devices, they have done so across over eighty different countries and mobile carriers. This is the most perfect mobile device and application marketplace match ever created. Apple controls everything from the device research and development, manufacturing, sales, and application delivery. Reducing the mobile carriers to the point that they are simply service providers. Prior to the iPhone, mobile carriers controlled everything from device features, names, and what applications were available at what price. Under the iPhone, they control just the cellular service. Palm, Google, and soon Microsoft will try to replicate the Apple App Store model, but none have yet to be able to -- even though they have the perfect example of how to do so.
One year ago there were 65,000 applications available that had amassed 1.5 billion downloads. As of now there are over 229,000 applications available and those applications have been downloaded a total of over 5 billion times.
Growth in the number of applications this year has been more linear than the exponential growth we saw the first year. That has more to do with the saturation of the app store than it does with size of the market. Over the past 12 months we saw nearly 200,000 new applications approved and nearly 4 billion additional downloads. That's a 3x growth in number of applications this year as opposed to a 109x growth the first year. That works out to a pretty steady 10-20% growth in the number of applications, month-over-month for the past 12 months.
If the current growth trends continue, the App Store could see 35 billion downloads of nearly three-quarters of a million different apps one year from today. Lofty goals indeed, but I don't think we expected to see the growth we saw this past year. With the continued adoption of the platform on revised devices like the iPhone 4, and whole new device lines like the iPad, and potentially others, I think there's a great chance that it will continue that growth.
While in it's first year, application prices dropped considerably and quickly, they have remained fairly steady this year. Due to changes made this year we can expect to see the growth of freemium applications continue as well. And more income will be generated by in-app purchases versus application sales. This is something we can not track though, so it will be a mystery how much income this will bring developers.
The last year has not been without issues. While the App Store to consumer segment continues to be very well received, Apple still has issues to address with it's developer relations. While greatly improved, there are still issues with application approval. In addition, the open-ended nature of that developer agreement has given Apple the opportunity to change their mind repeatedly and remove an entire segment of application from the App Store without notice.
The developer tools provided by Apple continue to evolve. Xcode, the development environment provided by Apple is consistently lauded by developers as the best available on any platform. The next version, Xcode 4 appears to be even better. While still in beta and under NDA, developers have been leaking a few details here and there that make it sound like a great step forward. Adding features often requested and integration of features such as interface designer and the Instruments performance monitor into the main application.
While everyone knows that developers have to play by Apple's rules if they want to be in the App Store, those rules are an ever changing target. This causes problems as it's difficult to develop to rules that are enforced inconsistently and constantly changing. We've seen whole companies sprout up, spend money researching and developing applications, and then be ruined as those applications were not approved by Apple for sale in the App Store. Thereby destroying the company that had been built up exclusively to develop for the iOS platform. This has to change.
We've also seen whole segments of application approved for sale and then later removed from the App Store. Segments such as Google Voice based application, applications that present a desktop-like interface, and so-called bikini apps were once approved and then later removed - en masse from the App Store. This too has to change.
The application approval delay has been reduced considerably -- a job well done there. But there are still some apps that fall through the cracks and don't get approved in a timely manner. The real issue there is that the developers don't know why. There is no communication back to the developers on what is going on, what the potential issue is, or how to resolve it. It appears this is usually caused by an exception. An app reviewer takes a look at the app and has a question and passes it up the chain of approval. That seems to be where it gets stalled. Nothing is communicated back to the developer other than it requires further review and it can stall for weeks in that status. Oddly, some developers have been able to remove that application and re-submit and have it go right through as a different reviewer doesn't see an issue. There is the inconsistency and communication issues, those need to change.
Over this coming year I hope to see Apple firm up it's developer agreement and explicitly spelling out what developers can and can not do in the App Store. And then the important part, stick to that agreement for all developers. You can't ignore the rules for some developers and strictly enforce them for others.
While there are reasons to change the rules to adapt to the changes in the market, keeping these changes to a minimum and communicating them properly before they are made are the key to keeping your developers happier.
Censorship has become a concern. We've seen the issue where any application that pulls data from the Internet needs to be marked as 17+ since they could, theoretically, pull adult content. This has been very randomly applied to apps it seems. If it were consistently applied, the NY Times application would be marked 17+. It, of course is not marked that way. We've also seen applications rejected that could be considered a freedom of press concern.
Censorship could become a major concern, and something to think about for any publication releasing an app on the App Store. Some theorize a world where Apple can control the media by approving or disallowing applications based on their political content. While I don't think it's a huge potential concern -- or at least not as much of a concern as conspiracy theorists would make you believe -- it needs to be considered when developing for the iOS platform.
In summary, the App Store is growing by a phenomenal amount and sales of devices and applications show no real signs of slowing down. We've seen growing pains as the larger the App Store gets, the harder it is to manage, in general those have been addressed well. There are issues with developer relations and approvals, but consumers are happier than ever.
In spite of the issues, the state of the App Store is strong.
