Chicago (IL) – Remember the good old days of shareware and those success stories that made millionaires out of hobby developers with a good idea? Apple’s App Store sounds like a similar opportunity for part time developers to play with the big boys and once again offers a level playing field to address a huge demand for software. The first success stories are already emerging and could allow a few lucky developers to quit their day jobs.
Analysts believe that Apple’s App Store could become a $1 billion business opportunity within a year and may outsell iTunes at some point. If early App Store statistics are any indication, the most popular iPhone applications are now installed on every fifth iPhone out there, creating almost instant wealth among developers. Pangea, a relatively small developer, is estimated to have made already $1.2 million on one weekend by selling its puzzle game Enigmo. And many part-time programmers are now collecting $2000 or more per day.
Facebook and Tap Tap Revenge
The free Facebook application hit one million downloads last week, as well as Tapulous' popular free game called Tap Tap Revenge. Both of these applications are now on one fifth of the estimated 6 million iPhones and iPod touches running the 2.0 firmware. The latest Tapulous' application called Twinkle (a Twitter client for the iPhone) is now on 80,000 handsets. The original version of Tap Tap Revenge was released for jailbroken iPhones.
Since Apple prevented developers from accessing a user's playlist through the iPhone SDK, the official App Store version of the game provides free songs from indie labels that can be downloaded from within the game. Now that users have downloaded over 2.5 million songs so far, record labels are taking notice and apparently are in talks with Tapulous to create premium songs for the next version of the game or as stand-alone song add-ons commercially sold through the App Store, essentially mirroring the Rock Band and Guitar Hero music licensing model. Tap Tap Revenge is great example of what can be achieved with $1.8 million of venture capital.
iPhone developers and VC funding
The Kleiner Perkins Caufield & Byers venture capital firm is the address most developers turn to for funding as it controls iFund, a $100 million fund created exclusively to finance hand-picked iPhone start-ups. In the first round of financing the firm funded several iPhone, one of them being Ngmoco, an iPhone games publisher run by the Electronic Arts' former chief creative officer Bing Gordon. Luckily, venture capital isn't a requirement for success. Sometimes, all it takes is the right idea.
This is certainly the case for Eliza Block, a 31-year old philosophy graduate student at NYU. Eliza is also the person behind 2across, a popular $5.99 crossword puzzle iPhone/iPod touch application that allows users to download and solve paid crossword puzzles published by the New York Times as well as many free puzzles. Eliza told TG Daily that she gave Cocoa a shot last summer to "avoid dissertation." She registered as a developer when iPhone SDK came out. "I wanted to do crossword puzzles on my phone, so I wrote an application for it. When I submitted it to the App Store, I expected to sell maybe 100-200 copies overall - if I was lucky," she told us.
When Apple began releasing daily sales figures to the developers starting July 28, she learned that 2across was earning her a $2000-a-day "scholarship." It is currently the 32nd best-selling paid application on the App Store and it sells 700 copies a day. "Each copy nets me $4.20," she said.
The rest, of course, belongs to Apple. "For the week I have sales data for (7/28-8/3 –ed), I've made about $16,000," she said. Eliza noted that she has no idea what her revenue is up to July 28. "I can't imagine that this sales rate will continue for very long," she said. The money Eliza made enables her to work full-time on maintaining the application, adding new features, and especially new sources of crosswords. She is currently working on adding international sources of crosswords. When the iPhone expands into all 70 territories by the end of the year, Eliza could tap new geographies as additional sources of revenue.
A new gold mine
The App Store had a fairly smooth launch (at least compared to MobileMe and iPhone 3G) but many developers complained about a lack of a two-way communication with Apple. Some developers said that it took a week or more before Apple approved a minor application update, meaning that developers couldn't immediately post important updates to fix critical and potentially dangerous bugs. Developers were also complaining about the lack of real-time sales data. Most of these complaints were a result of the backlog at Apple and are now resolved as Apple releases sales figures to the developers on a daily basis.
The surprising popularity of some applications is an early sign that Apple’s plans with the App Store as well as its distribution model may work out for iPhone developers. As it was the case with shareware, most applications will not reach any substantial sales volumes, especially not the kind of Tap Tap Revenge game or the 2across crossword puzzle application. But the fact that there is a system that takes the pain out of selling and promoting applications allows developers to concentrate on the development process. For most of them, more quality time spent programming translates into improved applications.
Analysts believe that Apple’s App Store could become a $1 billion business opportunity within a year and may outsell iTunes at some point. If early App Store statistics are any indication, the most popular iPhone applications are now installed on every fifth iPhone out there, creating almost instant wealth among developers. Pangea, a relatively small developer, is estimated to have made already $1.2 million on one weekend by selling its puzzle game Enigmo. And many part-time programmers are now collecting $2000 or more per day.
Facebook and Tap Tap Revenge
The free Facebook application hit one million downloads last week, as well as Tapulous' popular free game called Tap Tap Revenge. Both of these applications are now on one fifth of the estimated 6 million iPhones and iPod touches running the 2.0 firmware. The latest Tapulous' application called Twinkle (a Twitter client for the iPhone) is now on 80,000 handsets. The original version of Tap Tap Revenge was released for jailbroken iPhones.
Since Apple prevented developers from accessing a user's playlist through the iPhone SDK, the official App Store version of the game provides free songs from indie labels that can be downloaded from within the game. Now that users have downloaded over 2.5 million songs so far, record labels are taking notice and apparently are in talks with Tapulous to create premium songs for the next version of the game or as stand-alone song add-ons commercially sold through the App Store, essentially mirroring the Rock Band and Guitar Hero music licensing model. Tap Tap Revenge is great example of what can be achieved with $1.8 million of venture capital.
iPhone developers and VC funding
The Kleiner Perkins Caufield & Byers venture capital firm is the address most developers turn to for funding as it controls iFund, a $100 million fund created exclusively to finance hand-picked iPhone start-ups. In the first round of financing the firm funded several iPhone, one of them being Ngmoco, an iPhone games publisher run by the Electronic Arts' former chief creative officer Bing Gordon. Luckily, venture capital isn't a requirement for success. Sometimes, all it takes is the right idea.
This is certainly the case for Eliza Block, a 31-year old philosophy graduate student at NYU. Eliza is also the person behind 2across, a popular $5.99 crossword puzzle iPhone/iPod touch application that allows users to download and solve paid crossword puzzles published by the New York Times as well as many free puzzles. Eliza told TG Daily that she gave Cocoa a shot last summer to "avoid dissertation." She registered as a developer when iPhone SDK came out. "I wanted to do crossword puzzles on my phone, so I wrote an application for it. When I submitted it to the App Store, I expected to sell maybe 100-200 copies overall - if I was lucky," she told us.
When Apple began releasing daily sales figures to the developers starting July 28, she learned that 2across was earning her a $2000-a-day "scholarship." It is currently the 32nd best-selling paid application on the App Store and it sells 700 copies a day. "Each copy nets me $4.20," she said.
The rest, of course, belongs to Apple. "For the week I have sales data for (7/28-8/3 –ed), I've made about $16,000," she said. Eliza noted that she has no idea what her revenue is up to July 28. "I can't imagine that this sales rate will continue for very long," she said. The money Eliza made enables her to work full-time on maintaining the application, adding new features, and especially new sources of crosswords. She is currently working on adding international sources of crosswords. When the iPhone expands into all 70 territories by the end of the year, Eliza could tap new geographies as additional sources of revenue.
A new gold mine
The App Store had a fairly smooth launch (at least compared to MobileMe and iPhone 3G) but many developers complained about a lack of a two-way communication with Apple. Some developers said that it took a week or more before Apple approved a minor application update, meaning that developers couldn't immediately post important updates to fix critical and potentially dangerous bugs. Developers were also complaining about the lack of real-time sales data. Most of these complaints were a result of the backlog at Apple and are now resolved as Apple releases sales figures to the developers on a daily basis.
The surprising popularity of some applications is an early sign that Apple’s plans with the App Store as well as its distribution model may work out for iPhone developers. As it was the case with shareware, most applications will not reach any substantial sales volumes, especially not the kind of Tap Tap Revenge game or the 2across crossword puzzle application. But the fact that there is a system that takes the pain out of selling and promoting applications allows developers to concentrate on the development process. For most of them, more quality time spent programming translates into improved applications.