Apple’s App Store is a $1.1 trillion dollar business
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What will the future of apps look like? What will come after the model made universal and successful by Apple on the iPhone and then Google on Android? Today, the arrival of artificial intelligence and augmented/virtual reality are giving an idea of the possible changes ahead. But for now the patient’s conditions are more than positive.
The numbers
Apple has released data on the state of the ecosystem linked to the app store, which was invented by Steve Jobs’ company in 2008, one year after the launch of the iPhone and five after the iTunes Store, the music store of the ‘iPod, which was the real forerunner of the app store.
According to an independent report by Analysis Group, the App Store ecosystem generated $1.1 trillion in sales worldwide in 2022. Over 90% of this figure comes from transactions that didn’t happen directly through the App Store. This according to Analysis Group essentially means that these amounts have accrued exclusively to the developers and other third parties and that Apple has not received any commission on them.
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The turnover does not say it all, however, because it is the progression of the App Store that has grown steadily. Overall, from 2008 to 2022, the turnover of developers exceeded 320 billion dollars. According to Analysis Group, iPhone users downloaded apps more than 370 million times from 2008 to 2022. Today, the App Store offers nearly 1.8 million apps, more than 123 times the number of the first few thousand available in the 2008.
Most recent sales have taken off following the relative slowdown of the pandemic. Overall, since 2019, developer revenue in the United States has increased by more than 80%. In Europe, there has been an above-average increase of 116% since 2019. Developer revenue increased by 27% between 2019 and 2020, by 27% between 2020 and 2021, and by 29% between 2021 and 2022. In particular, small independent developers are those who are grown the most, outpacing large developers, with revenue increasing 71% between 2020 and 2022.
The next ecosystems
But what will happen with the advent of artificial intelligence and virtual / augmented reality? Meanwhile, there is already an example, which is that of social networks. while the “old” social-platforms like Facebook had built a market of apps integrated within the platform: games and forms of entertainment with different payment models (subscription, per-use, etc.), the new ones have not progressed much. Indeed, social videos such as TikTok, Instagram, YouTube for shorts are sterile from the point of view of third-party software, basing the entire operation on the mechanism of advertising views and the related tracking of users, or influencers with the “product placement”, real advertisement digital.
Artificial intelligence, on the other hand, is already showing a completely different trend: ChatGPT has paved the way for a rather complex ecosystem in terms of interaction and business models. Users pay $20 a month for a subscription to the service, but there is also integration with other platforms (within Microsoft’s Bing and Office) or plugins and web browsing that exploit artificial intelligence resources. Different systems that can create cloud software distribution models that are very different from traditional apps. The attempt by the big names and startups in the AI sector is to create software products and services that generate attention and get bought.
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The speech is very different for the augmented reality market. The only examples we have up to now are two: the Meta/Facebook store on Oculus, which however does not generate particularly interesting numbers (also because the devices are not yet widely distributed), and Sony’s augmented reality viewer products for its Playstation 5. The new VR2 version is not backwards compatible but allows you to have virtual gaming experiences of the highest level: however, it does not seem to be managing to generate a phenomenon comparable to that of the Apple App Store in 2008.
With regard to virtual/augmented reality, however, the entire sector holds its breath because precisely at Apple’s WWDC, the international developer conference that meets for one day in Cupertino on June 5th and then continues in virtual mode, the company led by Tim Cook, it will present one or two viewers that should be called Reality Pro. And it could launch a new sector that is synergistic to that of traditional apps, albeit an alternative one.
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