Back in October 2007, Steve Jobs announced in an open letter posted to Apple’s “Hot News”, that a software development kit would be released to third-party developers of iPhone applications in the beginning of 2008, and March 6, 2008 Apple hosted the media event, called “iPhone Software Roadmap” and the first beta-release of iPhone Software Development Kit (aka. iPhone SDK) became available immediately. The only thing missing, was a platform to publish all the new applications that the developers has created and it came with the iPhone firmware 2.0 in June 2008 and was called “App Store.” What Apple had no clue about, back in March 2008 when they announced the App Store, was that it turned out to be an amazingly successful business plan, but we will get back to this later.

The deal

Of course, developers want money if they should create applications for the iPhone, and Apple made the App Store the exclusive way to legally distribute applications for the iPhone and the iPod Touch, so what’s the “carrot” in this deal? Well, developers have been given the opportunity to pick the price they want to sell their apps for, and the developers earn 70% of the revenues while Apple keeps the remaining 30% to pay for running the App Store (and to improve the creditability in their bank account), and Apple also takes care of any credit card fees, hosting fees and marketing fees. It’s a great deal for developers, despite they only gets 70% of revenues paid monthly.

What about the free apps? There are thousands of free applications available in iTunes App Store, and some of them will get a review here at AppleLunch each Thursday, but what’s the point of making free applications? Well, if a developer wants to distribute an application for free, Apple demands no charge of it, neither from the developer nor the user. All you need is to join the iPhone Developer Program for $99.

Limitations

Apple doesn’t want everything to be published at iTunes App Store, of course. Things like malicious applications and porn won’t be accepted by App Store reviewers, neither will applications which are nearly identical to the iPhone’s original applications, such as the iPod function, Safari, etc. Though, with the iPhone OS 3.0 release, Apple has lifted their limitations a bit and allowed adult content in the App Store; applications you are only allowed to buy if you are at least 17 years old. Apple’s app reviewers have been criticized a lot in the media of their approval process and often you hear about an application that has been declined because of a tiny mistake, and the developers have to wait for another two to three weeks to get the application approved, and some, according to the media, even say that they’ve waited in months to get their applications approved by App Store reviewers.

App Store Resource Center

Apple isn’t ignorant of the criticism about the App Store reviewers, and therefore, this week, they have launched an App Store Resource Center to help developers submitting their creations correctly. It also helps developers how to find leverage features and marketing resources, and things you must have done before you can submit your binary.

A “gold mine”

What Apple launched back in June 2008 showed to be a gold mine for Apple. It surpassed every expectations and before it turned a year, 1 BILLION applications had been purchased from the App Store and 30% of the revenue went straight into Apple’s pocket.

When App Store was launched July 11, 2008, 500 applications were available, 125 of them were free downloads. On Apple’s Media Event, September 9, 2009, iTunes App Store contained more than 75,000 apps and approximately 1,800,000,000 downloads to date, and that’s roughly 4,235,300 downloads a day in average, and with more iPhones to come out on the market, that number might increase and with the iPhone’s entrance on the Chinese market in just a few months, the average downloads a day will surely increase a lot.

Competitors want to get their part

Apple’s success with the iTunes App Store hasn’t been neglected by the other manufactures of mobile operating systems. Google saw the potential in an online application store early and implemented it into Android in fall 2008. In the beginning, only free applications were to find in Google Android Market, as it was named, but to make Google Androd Market grow, they needed more customers and developers and in spring 2009 they announced the same 70/30 model as Apple uses in their iPhone Developer Program.

Next competitor on the market is Palm Software Store, announced in late 2008 and launched on June 6, 2009, and it has the biggest number of compatible devices yet, and it supports not only Palm OS-mobiles, but also Windows Mobile phones. In three weeks they hit their first milestone with one million downloads and amazingly 30 applications (irony.. what can I say). To compare, iPhone had after just three DAYS 800 apps available and 10 million downloads.

BlackBerry App World, is the name of the app store for certian Blackberry devices, and went live on April 1, 2009. This store was previously called BlackBerry Application Storefront, but circumstances changed its name to BlackBerry App World instead. To buy applications on BlackBerry App World, you’ll need a Blackberry device of course, but also a PayPal account to pay for the app.

With the Nokia N97, Nokia got through the gate and into the world of phones with a built-in app store. They decided to call their app store Nokia Ovi Store and was launched in May 2009. If the app isn’t free of charge, it can be bought using a credit card, or through the operator billing in selected operators. Inspired from Apple, Nokia also uses the 70/30 model to pay the developers for creating applications to the Nokia Ovi Store.

The last competitor is Apple’s all time rival, Microsoft. At a time this fall, Microsoft will launch their so called Microsoft Marketplace in 29 countries. The minimum requirements is a phone compatible with Windows Mobile 6.5 and if you have an older model, you cannot upgrade and get Microsoft Marketplace. It only comes with new models and this could be a huge disaster for Microsoft, but would that be a surprise? In fact, Microsoft has already one kind of app store planned, not for phones, but for the Microsoft Zune HD, called Zune Marketplace, but it only contains music, video and podcasts and is more like iTunes. However Microsoft has confirmed that in the near future, apps will be available on Zune Market with the 4.0 software update.

The future of apps

iTunes App Store is growing every day with all kinds of applications, the one more advanced than the other. In the beginning, only small developers submitted applications, but when the huge companies got a taste of it, major applications began to arrive in the app store. Specially Electronic Arts began to develop games, including the bestseller The Sims 3. In January 2009 at WWDC, TomTom announced that they had decided to create a turn-by-turn GPS application for the iPhone 3G and later models, along with an accessory called TomTom Car Kit, which is a dock that you can use in your car and improves the GPS signal.

What is more fascinating, is applications like Metro Paris Subways that tells you what a certain building contains, just by pointing at it with the camera. If applications continues development, it will go beyond any kind of limitations of what you can image in just a few years. We all look forward to see apps in the future. With the iPhone developers and the App Store, only Apple makes limitations. Enjoy your lunch.