iPhone Software Sales Booming, $30 Million In A Month

iphoneApple’s (AAPL) ‘App Store’, which is designed as an application to offer downloadable software that can be installed onto an un-modified iPhone and Ipod, and where customers have the possibility to explore a great number of applications (500 third-party applications for the iPhone and the iPod touch, 125 of which are free downloads ) – since its launch on July 10, 2008 – has seen a lot of activity. Quite a lot as a matter of fact – with 10 million applications downloaded only during its first weekend.

In an interview with WSJ at Apple’s headquarters on Monday – Chief Executive Steve Jobs said — that users of Apple’s new App Store have already downloaded more than 60 million programs at an average of $1 million a day in applications sales, generating a total of about $30 million.

According to Mr Jobs, if sales maintain the current pace, Apple stands to rake in more than $350 million a year in new revenues from the App Store.

This thing’s going to crest a half a billion, soon, he added. Who knows, maybe it will be a $1 billion marketplace at some point in time. I’ve never seen anything like this in my career for software said Jobs.

However, Apple isn’t looking at the App Store as a main source for its revenues, but rather as a tool to differentiate its iPhone from the rest of mobile phones on the market. And differentiate — it has. Needless to say – Apple has turned using a mobile phone from a chore into a pleasure, leaving competitors scrambling to catch up.

“Phone differentiation used to be about radios and antennas and things like that,” Mr. Jobs said. “We think, going forward, the phone of the future will be differentiated by software.”

Apple takes a 30% cut of any purchase price for each App Store sale, allowing developers to retain 70% of the cost while free applications get distributed at no charge.

Developers’ share of iPhone application revenues was about $21 million, of which the top 10 developers earned roughly $9 million, Jobs said.

But App Store is not the only story today with Apple. One month after the Iphone’s July 11 debut – Apple’s new iPhone – according to Fortune — has hit the 3 million sold mark.

The 3 million figure is much higher than Wall Street analysts had anticipated. Forecasts called for total quarterly sales of three million to four million. Apple has reported strong demand for the device, totaling 1 million units sold in its first weekend of release.

One shouldn’t be surprise with the fast pace of sales. iPhone is a compelling product after all, and most definitely the best cell phone ever used, granted some more improvements are needed. Still, is a far superior product when compared with the broad array of mobile phones currently on the market.

Apple aims of capturing 1% of the global mobile phone market, and sell 10 million iPhones by the end of fiscal ’08. However, with an overwhelming demand – keeping current outlets supplied while attempting to take on even more, could prove to be challenging for the Cupertino-based corporation.

The new iPhone, even as it struggles to meet demand in existing markets — is selling in 22 countries and Apple said last month that it was confident that it will launch sales in 20 more on Aug. 22, with a target of 70 by year end.

If iPhone makes its target, it could grow Apple’s 2008 revenues by almost 20%. Jobs, has stated in more than one occasion that iPhone is going to be the ‘third leg’ of Apple’s business, insinuating Apple’s expectations for iPhone to succeed. Well, Apple has not only succeeded : it has already revolutionized the mobile phone market.

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About Ron Haruni 1068 Articles
Ron Haruni is the Co-Founder & Editor in Chief of Wall Street Pit.

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