Most Boomer readers know that Apple is a market disrupting monster without equal. Go down the list. PC, Mac, iPod and iTunes Store, iPhone and iPad, even Watch has disrupted the staid old watch business to become an industry leader.
With product after product Apple has overturned various technology industries with some degree of regularity even when those products do not have the leading marketshare. Among streaming music services Apple is #2 and growing but can you name the top 5? Roku, Google, and Amazon sell more streaming media sticks than Apple sells Apple TV units, but guess which one owns the largest share of revenue and profits?
See? That’s what Apple does. Apple TV’s streaming media business is huge. Yes, there are competitors, but we know what Apple likes to do best, right? Make money.
Almost without notice and in less than 10 years, Apple has come to dominate the app store and app publishing business. App developers make more money with their apps on Apple’s App Store than Google Play because Apple’s customers are willing to spend money on applications while Google’s Android device customers are not.
How big is the app store business?
First, the App Store is included in Apple’s rapidly growing Services group, second only to the iPhone in revenue and profits. But how big is it? A few years ago analyst Horace Dediu pointed out that App Store revenue was greater than the U.S. movie industry’s box office receipts. The App Store was bigger than Hollywood back then. What about now?
Second, Dediu pointed out that Apple’s App Store revenue for developers— more than $26-billion– for 2017 was more than 30-percent higher than the year before. That revenue rate continues to grow. The payout rate to developers is greater than McDonald’s a few years ago. It’s greater than Google’s AdWords revenue by far. The App Store is a Fortune 100 Company all by itself.
Dediu predicts Apple’s App Store business will be worth more than the entire movie industry on planet earth sometime in 2018.
Apple reported that iOS developers earned $26.5 billion in 2017. A year ago the figure was $20 billion. The growth rate is then about 33%. The cumulative payments to developers can be calculated as $86.5 billion. This amount was generated in a span of less than 10 years, with the first billion paid by June 2010.
What hath Apple wrought?
The application industry is huge and Apple is the reason why, starting with the App Store launch just under a decade ago. And that’s just revenue from apps. What about the free apps which generate advertising and product sales revenue for their publishers?
Facebook, Twitter, Linkedin, Tencent, YouTube, Pandora, Netflix, Google, Baidu, Instagram, Amazon, eBay, JD.com, Alibaba, Expedia, Tripadvisor, Salesforce, Uber, AirBnB and hundreds of others are all “free” apps enabling hundreds of billions of dollars of interaction none of which are captured in the App Store revenue data. The vast majority of activity for the top commerce, communications and media properties are now coming through mobile devices.
All of that stems from Apple’s venture into the application publishing industry in 2008.
The App Store is big. Very big. But it wouldn’t exist without Apple’s hardware. For all the Services group’s rapid growth, Apple remains a hardware company.