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6/24/2010
00:00 AM
Ed Hansberry
Ed Hansberry
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App Store Isn't Big Profit Center

Just about everyone knows what the App Store is for the Apple iPhone. The "There's an app for that" theme is widely recognized and even parodied in ads like Verizon's "There's a map for that" commercials. Apple isn't raking in the profits though from the store, and that's ok.

Just about everyone knows what the App Store is for the Apple iPhone. The "There's an app for that" theme is widely recognized and even parodied in ads like Verizon's "There's a map for that" commercials. Apple isn't raking in the profits though from the store, and that's ok.The store has over 200,000 apps right now, though a good chunk are really ebooks of some sort. The cost of apps range from free to $899.99, and over 5 billion have been served since the store opened up in the summer of 2008.

According to VentureBeat, Piper Jaffery took those numbers, combined with the one billion dollars paid out to developers and worked a bit of financial magic to determine that the store made $189 million. They estimate the store has $429 million in revenue. I am not sure these figures take into account the infrastructure that had to be built to support the store, nor the wages of the people that daily run the store and judge the apps. If I had to guess, I'd say the true profit of the store is much lower than what has been estimated.

It doesn't matter though. The App store is best viewed as a marketing tool to make the iPad, iPod Touch and iPhone more attractive. Even if it were bleeding money, it wouldn't matter. The incredible breadth of apps available is a big thing that keeps the iPhone popular, and if users have some apps they just cannot do without, it makes it less likely they will drop the iPhone in favor of something else. The App Store is worth far more than the profit it generates.

Oh, and that $899.99 app? iRa Pro. Are you downloading it yet?

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