How Apple Changes the Mobile Software Market

A billion downloads and over 35 thousand applications in the App Store - this is what Apple boasted itself with in mid April. Last December statistics showed 300 million downloads and 10 thousand apps in the App Store.

Why to cite this archival data now? There is a new report by Strategy Analytics that points at the fact that Apple won 12% of the mobile software market at the end of 2008 to become its leader. The iPhone producer jumped into this very dynamical computer software market niche that will soon become the driving force of the whole market and will change the business character of telecoms. Repercussions connected with Apple's debut on the mobile software market are far reaching. As the author of the report - David MacQueen - notices, due to the fact that the mobile software market is now densely populated, competition gets really hot. Lower prices are natural consequence of this rivalry, which consequently leads to lower margins of developers. Apple does not make it any easier for developers. The App Store operator did not set clear rules how it promotes applications and developers on the most attractive places in the App Store.

The gravity centre of the mobile software market seems to be changing due to App Store's unprecedented success. Mr MacQueen notices the distribution of mobile applications used to be dominated by telecoms that kept the majority of profits to themselves before the App Store debuted. After App Store's success that was completely independent from telecoms other producers of mobile hardware reacted in the most natural way - they rushed to introduce their own mobile stores. On one hand, they wanted to get their own bite into the mobile software boom and on the other hand, to get independent from mobile operators.

Telecoms do not want to get ousted from this attractive business and try to adjust their tactics in hope to win back developers' attention - explains David Kerr from Strategy Analytics. A couple most important players on the global telecom market have already announced their projects to launch their App Store clones. There are two biggest telecoms in the world among them: T-Mobile and China Mobile - the players with high chances to get their foothold on the mobile software market.

"Apple’s (stores) has won the initial skirmishes but the war is far from over," Mr Kerr concludes. Possibly it's true but Apple will not let it go after this initial success and winning over 12% of the market. A new version of a mobile operational system iPhone 3.0 will introduce extremely important innovation that will surely bring additional hundred millions - micropayments. Not once, not even twice has Apple proved it has a penchant for creating particularly purchase-friendly environments for its products. There is a "buy" link in every little corner in iTunes. You can order print of your calendars or photo albums with a single click in iPhoto. You are able to buy apps from the App Store so effortlessly that you might just not feel you're spending money. It will become even easier now. So far the purchase of app has been a one-time event in the App Store. iPhone OS 3.0 will change this dramatically as developers will be allowed to sell additional content right inside their apps now. The consequences of it are easy to predict and actually Apple has already shown a trace of it to us when Scott Forstall presented a preview of iPhone 3.0 back in March. You play a fancy game; you have just ended the second level and you want the next one? Pay for it without leaving your game. You want to lead a virtual life with an iPhone app? Pay for additional elements of your virtual entertainment without leaving your second life. You want to follow live result of Champions League final? Pay for it. This will boost money flow in the App Store and Apple will cash 30% of any additional dollar taken over from users.

It is almost certain that a highly anticipated new product from Apple - netbook vel. iTablet will be based on the software distribution from the App Store. This way Apple will not only largely develop its numeric distribution (the number of products with access to the App Store) but also weighted distribution (the number of products that bring the bigger chunk of sales).