App Store Applications Barely Making Any Profits

Despite the hype surrounding it, most apps don't sell at all

Apple's App Store is a huge success if you look at the amount of press it has received since its launch almost a year ago. With 36,000 applications and stories of developers making hundreds of thousands of dollars overnight, it seemed like the hype was justified and Apple had notched another victory. That may not actually be the case, writes developer Rick Storm. In fact, most applications don't sell at all and for most it's a game of chance according to his blog post.

He accounts the success he has had with his own applications, three of which are in the charts in their category. His social networking app Zen Jar is #34 in the Social Networking list, which is a popular category, but is in fact getting a mere 30-35 daily downloads, which adds up to just about a little over $20 a day for the developer. Another app that ranks at #95 in the board games category has just 6-8 downloads a day, making around $4 in the process. If applications that are in the charts fail to make significant amounts of money, what chances are there for the rest of them?

The fact is that, with so many apps, they can't all share the spotlight and they tend to fall into obscurity very quickly. And the vast majority of them don't make any money, let alone making their authors rich. Storm compares the App Store to a lottery with many buying tickets but very few winning the big prize. He believes this to be a problem for software entrepreneurs in general as they fail to see if a service is going to be profitable and not just successful in terms of users and popularity. YouTube is one such example, being one of the widest known sites in the world, yet losing hundreds of millions of dollars every year. The same is true for most social networks, even Facebook or Twitter, which don't really have a business plan even though they amassed huge user numbers.

The developers may not be making too much money but Apple itself isn't either, just breaking even with the App Store, even though it has over 1 billion downloaded applications. After accounting for the expenses with infrastructure and advertising, estimates put profits at most at $10-20 million. Still, Apple isn't complaining as it launched the App Store as a way to drive iPhone sales.

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