Mobile App Store: The Next Game Changing Step

by Sachin Balagopalan on June 8, 2009 · Comments

I remember reading an interview with Steve Jobs a couple of years ago where he was explaining the idea behind the app store and how it was not meant to generate significant revenues for the company. The app store according to Jobs at the time was to simply give developers an outlet to showcase their applications and more importantly to increase the iPhone development platforms footprint. I suspect neither Steve Jobs or any one else realized at the time how huge this “app store” concept was going to be. The market for mobile apps is booming as this NYT piece explains …

With the number of downloads through Apple’s App Store topping one billion and more than 40 million iPhones and iPod Touches sold since 2007, an increasing number of companies are seeing the mobile industry as a source of sustained revenue.

A source of sustained revenue because of the sheer magnitude of app downloads and it’s not just the iPhone app store anymore. Palm, RIM, Nokia, Android and even Microsoft now have mobile app stores that follow the Apple model.

Here is the kicker …

“Companies are asking themselves, ‘How can we get on the iPhone?’ ” said Matt Murphy, a partner at venture capital firm Kleiner Perkins Caufield & Byers, which maintains a $100 million fund devoted solely to investing in start-ups creating apps for the iPhone. “Instead of trying to organically create their own property, they’re looking at applications with traction and cherry-picking the ones that seem like a good fit.” (A polished, professional iPhone application can cost around $50,000 to produce.)

With an instantaneous and established presence on the iPhone platform, he said, a company could tap into a stable, loyal fan base. For a big company that is trying to go mobile, and quickly, “those few million users are almost more valuable than the property itself,” he said.

There is a new shift occurring in the mobile application development space. If you’re a mobile developer trying to “make it big” your chances are greatly improved if your app sells well via the app store and you build a loyal fan base first. The app store has sort of become a startup shopping catalog for big companies looking to get into the Mobile app space. Harnessing creative developers and bringing their product to market seems to be the next big step and it’ll be interesting to see how this new breed of startups make out.

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