The rise and rise of Apple App Store

Today Nokia released its much publicized Ovi Store and reviews have not been too kind. Nokia expects 3.5 million developers in Forum Nokia ‘creating hundreds of thousands of apps‘. Nokia had originally released Ovi in October 2007 allowing customers to buy music and games. By that time, AAPL had already crossed $600M revenue in it’s ‘other music related product & services‘ segment [AAPL includes sales from iTunes Store in this segment]. This prompted me to look deep into Apple’s numbers around the App store using Gridstone’s SEC & Transcripts Search Engine.

Apple has always maintained an edge on all its peers, far and close, and grown consistently. The number of iPhone Apps hosted on the Apple App Store has grown QoQ: 900 (Jul 08); 5500 (Oct 08); 15000 (Jan 09); 35000 (Apr 09).

The July 2008 pricing outline for the app store cited “90% of the apps being priced at less than $10”. Considering 1 billion app downloads over 9 months, Apple would have sold 900 million paid apps over last 9 months. As of today, the top 10 downloaded paid apps on Apple App Store averages to $1 – translating to a whopping $900M revenue in the 9 months period and a yearly $1.2B revenue from Apple App Store. Even if we take a slightly conservative approach and put the number of paid apps to 2/3rd of its 2008 ratio, it would still be $800M of yearly revenue!

Where did Apple report all these numbers? In it’s April 09 10Q Apple reports a $1.2B (6 month ended) of sales from it’s software, service and other sales segment. This includes ‘sales of Apple-branded operating system, application software, third-party software, AppleCare, and Internet services’ and probably includes revenue from the App store. Apple is probably going to make close to $250M revenues from the App store in coming quarters, which is incredible!

[update 27/05/2009] I noticed that the valuations going around on the the internet seem to be between $20-40M in one case (http://mashable.com/2009/05/14/apple-iphone-apps-profit/) and an excess of $500M yearly revenue in another (http://seekingalpha.com/article/131730-how-much-profit-is-apple-making-from-the-app-store). The devil is in the details. Nobody seems to have an estimate of how many paid apps are actually downloaded. The answer (or approximately so) is embedded in AAPL’s July 2008 transcript where it has announced around around 90% of the apps to be paid and priced below $10. Even if this number has changed, it probably will not be very different.

Which companies are impacted by swine flu?

The swine flu epidemic (leading to a pandemic) has terrified the world. It’s impact can be felt across industries – with travel and hospitality being the worst hit. I tried to see which companies report a hit in performance because of swine flu. Using Gridstone’s Search Engine, I searched for swine flu. Here is a sneak-peak of the results:

Search results for swine flu using Gridstone Search

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The next big thing

This is a great talk by three Silicon Valley serial entrepreneurs – Tony Perkins, CEO of AlwaysOn; Tim Draper, Founder and Managing Director of Draper, Fisher Jurvetson; and Michael Moe, Founding Partner of ThinkEquity. They talk about several different ideas around opportunities in the current slow-down and the global marketplace.

Source: Entrepreneurial Thought Leader Lecture, Stanford Technology Ventures Program.

What is Microsoft upto?

This sure is a no-brainer. It is gearing up for a whole new battle of market share on the Web – Ad Revenues, et al. Mr. Gates announced in the World Economic Forum at Davos this year that his company is getting ready with some new and exciting products in the WWW services/offerings arena. Interesting was his comment that there is not just one company in this world of “Search”. And why not? The online ad market is projected to grow to $61 billion. You sure have arrived Mr. Gates – though inorganically, but who cares.

Microsoft announced it’s intention to acquire Yahoo! and made an offer of $31/share valuing the company at $44.6 billion. This is after the two companies decided to work together in 2006.

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