The App Store Era’s Biggest Winners And Losers
Five years in, here’s who has done the best and who’s lost the most.
Apple. Obviously. Apple’s iPhone App Store wasn’t the first way to load apps on your smartphone, but it was the best and quickly became the most popular. “There’s an app for that” became a universal (and quickly annoying) catchphrase. The App Store has helped Apple generate billions of dollars in profit selling millions of iPhones, iPads, and Macs — plus its 30% cut of App Store sales. It has become the go-to model for distributing software, since replicated by every platform- and OS-maker.
Us. Thanks to the App Store, we have access to millions of software tools that didn’t exist before, at astonishingly low prices, with an incredibly easy way to find, purchase, and update them. I remember once buying a Palm Treo e-mail app for $40, awkwardly side-loading it, and probably never updating it, bugs and all. Now you can download an amazing variety of apps for little or no money and easily keep them up-to-date for new features or bug fixes. (Apple’s even making it easier in iOS 7 this year with automatic updates.)
Developers. Not all of them. But most of today’s App Store success stories would never have been able to do what they did in a world without it. The App Store has made many millionaires, and has provided the distribution mechanics for someone like Instagram founder Kevin Systrom to generate a billion dollars of value in short time. Even big, public companies like Pandora and Facebook owe much of their growth to the App Store. Also: Loren Brichter!
Google. The Android app story and Google Play store still aren’t as good as Apple’s, but they’re improving. And while mobile advertising is still in the figuring-out stages, Google is the clear leader there so far. (Thanks in part to its acquisition of AdMob, still the big App Store advertising winner.) One long-term unknown: How will App Store and in-app searches disintermediate Google’s bread-winner search engine?
Rounded rectangles. For obvious reasons. Also, the color blue.
Mobile operators. It wasn’t long ago that mobile app distribution was their territory, and the “carrier deck” ruled — a walled garden of mobile websites, services, and apps, with relatively anti-developer revenue-sharing terms and exclusive agreements. Now, carriers rarely see any direct revenue from mobile app sales, and developers have pinched operators with free or cheaper ways to make phone calls, send text messages, share photos, and make video calls. This isn’t to say that operators have done poorly over the years — they’ve picked up hundreds of millions of new smartphone customers, who pay more for service than before. (You might even argue that the “dumb pipe” route is the better one for most operators.) But losing control over content and software distribution certainly wasn’t the plan.
Microsoft. It’s hard to argue that the rise of mobile computing, powered in part by the App Store, hasn’t hurt Microsoft. It’s still the world’s biggest software company, and is still very profitable. But the PC market is fading and Microsoft still doesn’t have a credible mobile story.
Big Gaming. The shift to free or cheap mobile gaming — from $50 console gaming — hasn’t been great for the Electronic Artses of the world. Mobile is a growth area for the company, but the App Store era has been better to smaller, more nimble gaming upstarts. Over the past five years, as mobile gaming has exploded in popularity, EA’s revenue has only grown 23%, to $3.8 billion in fiscal 2013 from $3.1 billion in fiscal 2007. (SplatF reader Chris Biggs notes that Activision, on the other hand, did significantly better during that time.)
Big Media. As reader Andrew Stillman notes, Apple’s 30% bounty on magazine and newspaper subscriptions isn’t great for publishers. Moreover, free news distribution tools like Twitter and Flipboard have increasingly come between readers and publishers. On the other hand, Apple’s growth — and the App Store’s — has provided great article fodder for business and tech publications!
Electronics retail. When the software store is on the Internet, who needs software stores? The only real winner here has been the Apple Store.
Dishonorable mention: AIM. I can’t think of a single app that I used more on the desktop — well, really, Adium, the great Mac AIM client — but less on mobile. AIM isn’t really central to AOL’s plans, nor is it their biggest problem, but what a sad story.