The Number of iPhone Apps is No Longer Meaningful

| Editorial

There was a time when it was really, really important for Apple to both promote app development on the iPhone and to tout the number in comparison to the competition. Thats’s no longer true.

How many apps do you have on your iPhone? How many could you load? (The answer is 180 for iPhone OS 3.x) So is it realistic to care whether there are 200,000 iPhone apps or, say, a billion? Both numbers are so far out of reasonable range, the difference, numerically, ceases to become a differentiator.

Also, as my distinguished colleague Bryan Chaffin pointed out last week, Android could very well become the Windows of the mobile community, surpassing the iPhone in every metric, even app count.

So even though Steve Jobs has pointed out that Apple must be doing something right if it has 200,000 apps available, I don’t think that’s a metric Apple can use anymore to gauge success.

The competition from Android is indeed intense. According to Google, back in March, there were 30,000+ apps available for Android. Is this a race Apple is sure to win? Does it need to?

The New Success Metrics

Apple right now is at a crossroads. It has surpassed Windows Mobile in market share and has been nipping at the heels of RIM. All of a sudden, Android comes along with exploding market share, and Apple’s dreams of easy dominance have evaporated. Apple’s goal now must be to expand worldwide sales, and that implies adding carriers in the U.S. as well.

Mr. Chaffin argues that Apple doesn’t have to be the market share leader, merely the most profitable. With low margins on Android phones and the commoditization of that market, I can foresee a future headline: “Apple with 20% market share grabs 80% of the profits.” However, I don’t think Apple’s willing to settle for that in the near term. The friction with Google has Apple thinking that there’s going to be a long, pitched battle for market share before the company settles for a small but profitable bite of the market — like the Mac.

One of the ways to fight that battle is to use Apple’s head start in foreign markets like China, Japan and Europe. Today, Morgan Stanley analyst Katy Huberty predicted that Apple will sell over 60 million iPhones in 2011 thanks to increasing demand in China and by corporations.

At the last earnings report, Tim Cook mentioned that whenever Apple added wireless carriers overseas, iPhone demand (and sales) went up. Recent surveys suggest that 17% of Verizon customers would upgrade to an iPhone if offered. It stands to reason that, eventually, Verizon and Apple will strike a deal because each company has huge gains to be made by such a deal. Money talks.

Inevitable: More Wireless Carriers in the U.S. 

On the way to obtaining a deal with Verizon, however, Apple may need crank up the pressure on Verizon, say, by partnering first with Sprint. There are rumors to that effect floating around today.

The iPhone is a mature product that includes minor tweaks each year. Apple is probably thinking that it won’t be able to extract large carrier payments, even on subsidized phones, much longer in light of the Android competition. Plus, costs are coming down thanks to the high volume. It’s a race to balance market share, gross margins, and profitability right now, and it’s not clear that relinquishing market share, let alone touting the number of apps available is the right way to go.

That’s why I expect Apple to add wireless carriers in the U.S. and overseas in 2010/11 and cash in on the tremendous popularity of the iPhone before Android can gain further traction. If Apple eventually settles for being the niche market smartphone seller that makes a healthy profit, it’ll be only after a long, hard fought battle with Nokia, RIM and Android for the next two years. That’ll allow Apple to buy time for the next generation products that, again, change the game in Apple’s favor. The iPad is just one of those products.

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21 Comments Leave Your Own

Tiger

Note you say “The iPhone” versus the offerings from Android. That has what makes Apple’s story such a success. They have one iPhone, with successive models. Google doesn’t even make a phone. They make an OS and farm it out to anybody and everybody who will take it, irregardless of quality.

Sounds VERY much like MS Windows now doesn’t it. And when the customer gets crappy service and buggy interface problems, there will be plenty of blame to go around for it.

Verizon had their shot at the iPhone. I’m still not sure they deserve another. And I also think it will cripple their bandwidth, because they will get a lot of switchers. So it will make them money, but cost them dearly. There were distinct reasons Apple got in bed with AT&T. Not everybody is pleased with the arrangement, that’s for sure. But nobody was ever going to be either.

It’s a multibillion dollar game.

YodaMac

I agree completely with “Tiger”.  As long as Apple continues to be the only company making the “whole widget” then their offerings will continue to out-perform the competition.

To the author: So you’re saying smart phones should just offer the exact number of applications that can actually fit on the phone at one time????  No more options? No additional choices?  Weird argument. :(

John Martellaro

Yodamac.  I didn’t say that. What I said was that the difference between 200,000 apps and a billion apps is meaningless because one can only experience so many apps in a lifetime.

hangtown

Not only that, we’ve SEEN from the windows platform that having more application available means nothing when OS X applications are (with a couple notable exceptions) much nicer to use and provide a superior user experience.

I’d rather use my Mac any day with whatever apps are available on it than use windows with billions of rotten applications written solely with dollars in mind rather than as a labor of love. Most Mac application developers have written software for the Mac even before the Mac’s growth spurt, and they do it because they love it. They write better software for it.

Unfortunately, I don’t know that I’d say the same about all iPhone apps, but then again, I wouldn’t say that all Android apps are labors of love from what I’ve seen either. It’s a fragmented platform at any rate. Unless they fix that, the numbers will be impressive but the user experience will remain half-baked.

webjprgm

The one exception to the better-apps-on-Mac rule is Paint.NET.  I still haven’t found a replacement for it in either Mac OS X or Linux.  It is a simple interface with support for layers, many useful tools (selection, shapes, paint brush, etc.), and a few effects.  In addition it has all the swiss army knife features I generally need from resizing and cropping to saving in different formats in sensible ways.

GIMP has a horrible interface and takes too long to start up.  Pixelmator and Graphics Converter don’t have the same set of tools or the same ability to save in reasonable formats. (One example is saving PNGs with/without gamma correction so it works on a web site with matching background colors.)

This is why there are efforts to port Paint.NET, such as a mono project and a from-scratch linux project Pinta.  Neither is complete.

OK, ending rant on paint programs.  The point being that when there are more apps there are going to be a few gems that don’t exist when there are fewer apps.  But for the most part I agree that counting more apps is not a good metric.

Also, should we debate what is most profitable for Apple as a for-profit company with shareholders, or should we debate what is better for the consumers?  I want Apple to get on Verizon and Sprint so they can compete with AT&T forcing better network and more reasonable pricing.  Maybe that won’t happen anyway though.

myramoki

Ah hangtown, the age ole “So what if Windows has lots of apps, most of them are crummy things with horrible UI’s, and I’ve got all the apps I need on my Mac!”  I’ll admit very much to using that same argument myself.

Its a nice argument to make, and certainly applies well to small developers, but there is no getting around the fact that for the longest time we only had Quicken for Mac and no competition to drive them to do better, we haven’t seen Autocad on the Mac since 1992, and numerous other examples can be cited.  Its great if you have everything you need, but more apps is more apps, and more possible coverage of what people want to do.

Now we’ve got the reverse going on for iPhone, and Apple’s quick to say “Hey look at all our apps!”  Great, awesome, so now we’ve got tons of apps, we are guaranteed to have tons of crap.  People saw iPhone as a way to make lots of money and apps poured into the market.  How many of them are truly good?  How many are being well supported?

I went looking a grocery list application that could receive pushed updates from a spouse on additional items needed.  I figured I might find a couple apps.  I found too many to even begin to check into at the time.

We are now faced with an avalanche of possibilities from which to choose.  Does it matter if there is one app for me that’ll do what I want, or 50?  Having a dearth of apps means you have to find a way to justify why people should work on your platform.  Having an excess means nothing more than you can find dozen’s of ToDo apps. It is no more an indicator of whether a product is ‘better’ than is Windows excess of software choices.  The message needs to be more than “Hey! We’ve got a ton of stuff!”

Peter

[...] but there is no getting around the fact that for the longest time we only had Quicken for Mac and no competition to drive them to do better

Actually, this isn’t true.  There have been plenty of accounting apps for the Mac.  The problem is that none of them have the name-recognition—the brand—of Quicken.  For most people, if there’s no “Quicken”, then you can’t do accounting on the platform.

In the environment with huge numbers of applications, branding and marketing become more important.  Are you going to devote the time, effort, and money to figuring out which Twitter app is best?  Or are you going to go with the one that you heard was pretty good?

hangtown

I don’t disagree that more options are better, but when people used to tell me about the (channel Carl Sagan here) BILLIONS and BILLIONS of Windows apps available, I always asked them, “how many of those do you use, and how many of each TYPE of app do you use?”

I’m not knocking the idea of more games, Autocad (or more importantly, 3ds Max) and other software becoming available on the Mac. I am saying that sheer volume of titles means absolutely NOTHING unless what you need is available, and unless it’s also done right.

Pedant

Of those 30,000+ Android apps, ask someone technical how many are “end-user” apps, and how many are “make up for a deficiency in the platform” apps?

On iPhone, the answer will be skewed completely differently.

xmattingly

I actually think the massive number of apps available is a bit of a detriment for Apple - not because “you’ll never be able to cram them all on your phone”, but because it makes window shopping for a particular type of app a tedious pain. Choices are good, but come on… last time I checked, the App Store had a few dozen chess games.

Two things could happen to make this a better selling point for Apple: 1. They could implement an eBay-style search where you could drill down a list based on your own criteria, and 2. They could put a handful of their own App experts - who would have a pretty broad knowledge of what’s on the store - to make some deep cuts based on certain criteria. Say, Apps that have had less than x-amount of downloads over a certain time frame + low rating… that sort of thing.

Also, I would have to disagree with iPhone’s yearly “minor” tweaks. I don’t know if you saw the iPhone 4.0 keynote, but that update is looking like a pretty big deal to me. Multi-tasking done intelligently, App folders, and one of my favorites that no one seems to be talking about: bluetooth keyboard pairing. smile

Dean Lewis

For the record, Autocad, at least at this rumor stage, is returning to Mac OS:

http://www.macrumors.com/2010/05/22/autocad-coming-to-mac-first-beta-screenshots/

So, if true, you can likely soon scratch Autocad off your list of Windows-only software.

AdamC

The author of this article is relying too much on the goog I/O to suggest that the iPhone is losing out to the android one.

Perhaps he had forgotten that the number of android phones doesn’t include sales to the enterprise and the number are not sales number but from a survey so reliable can it be.

Yeah how many of the android phones were actually used and how many of their apps were downloaded. Until the day that the same android OS is found in all android phones and not proprietary locked to the makers Apple has nothing much to worry about.

UKappleFan

I get the idea that in the US the smartphone landscape is quite competitive, and that Android is making a big splash. Over here in the UK, the iPhone is really popular and I doubt if many people even know what Android is! Helped by the fact that the iPhone is available on the 3 largest carriers, no doubt.

John Martellaro

AdamC: Actually, I said nothing about Google I/O.  I used comScore market data:

http://www.businessinsider.com/android-gains-more-subscriber-share-2010-4

Martin Hill

@John Martellaro
John, normally I agree with your points of view, but on this I have to disagree.

It is not about how many apps you can fit on your phone, but rather the variety to choose from that matters.

With 200,000+ apps and growing, you have a far higher chance of finding apps in your niche or regional area of interest or need than a platform with fewer apps. 

The killer argument for Windows was always that if you had the need for a specialised medical program, or an engineering program or stats, or financial program or of course the killer one - games etc, far more often than not you’d find it on Windows and not on any other platform. 

Now these days VMware and Parallels mean it is not such a disadvantage for Mac users who can run all Windows and Mac programs, but it is a problem for processor, RAM and battery constrained mobile users.

More apps *is* a big advantage and with Android app sales still being dwarfed by iPhone app sales and iPhone customers actually paying for a much higher proportion of apps than Android users, developers are going to continue to produce for the platform and the advantage is still Apple’s.  As Gameloft said, they make 400x more from their iPhone apps than their Android apps, a statement that has been backed up by many other Android/iPhone devs like Lava Labs.  Late last year Admob estimated that android app sales were only 2.5% of the iPhone App Store on a weekly basis.  These are big differences.

-Mart

John Martellaro

Martin Hill: You make some excellent points.  However, my original question remains:  How many apps does the iPhone need to get to the “killer argument” you mention? 50,000?  200,000?  1 million? 100 million?  When will we arrive that magical point—if we haven’t already? And secondly, if we are not quite at that point yet, is customer concern over that fact a #1 driving issue for Apple’s competitive strategy?

Martin Hill

@John Martellaro
you know, I don’t think there is a hard limit to the number of apps needed to fill every niche and need.

I think mobile is a very different use case than desktop computing because there are just so many small regional needs and possibilities in the world that filling them all or putting out a new innovative take on an existing niche present endless possibilities.

Thousands of people could still use an app that is only useful in my local area and there are hundreds of thousands of such local areas all across the globe that are the same.

-Mart

Substance

Great stuff as usual, John. 

The number of apps available for the iPhone was a Big Deal when the iPhone and app store were still reaching out to new customers.  It was important to show that the app store had developers behind it and that it was a thriving ecosystem. 

Now after 2 years of having the app store and 3 years of the iPhone I think it’s safe to say that Apple has achieved the respectability and market penetration it desired to call the whole iPhone ecosystem a success. 

From here on out, the number of apps doesn’t really matter like it once did, and as you and others have noted it can only lead to ammunition for Apple’s mobile competitors as the Android ecosystem tries to catch up.  Time for Apple to make another trademark maneuver and change the rules before the market catches up.  Focus on the few remaining markets the iPhone hasn’t penetrated before settling in as the leader not in total market share, but in high revenues.

In the meantime, I wish Apple would focus its attention on the iTMS ecosystem (particularly AppleTV, NOW before GoogleTV makes it irrelevant) and adding DropBox-esque cloud synchronization features to MobileMe.

looper

One worrisome difference between the fact that the Windows software universe contains (some, a lot of, too much—pick one) rubbishware and the fact that the iPhone software universe contains (some, a lot of, too much) fartware is that there’s no “Windows App Store,” with Microsoft as a gatekeeper.  If a piece of Windows software crashes, the user might curse Microsoft as well as the developer for lack of stability; but if the program is simply an uncreative piece of junk, put out by a fly-by-night developer to make a quick buck off people who don’t base purchase decisions on informed reviews, then those users at least aren’t going to blame Microsoft for the fact that it was available in the first place.

Any software market that’s big enough is going to draw “spammers” who, like email spammers, make money off the small percentage of that big market who are dumb enough or ignorant enough to take their bait.  Again, nobody can reasonably blame Microsoft for this in the Windows software market; but as the sole gatekeeper of the iPhone App Store, Apple bears at least some responsibility for letting such “spamware” pollute the ecosystem (remember “I Am Rich”?).  Apple is already having enough trouble with their review process; as more and more apps become available, I’m concerned that this trouble will “scale” as well, with future slip-ups being not only embarrassing but damaging.

I like xmattingly’s idea of “culling” the App Store, except that I’d worry about unintended consequences.  If it was implemented in such a way that otherwise-good software that didn’t make a big initial splash would have a hard time staying in the store long enough to catch the eye of “App Gems” or some other big-audience reviewer, then it would exacerbate the 99-cent race to the bottom.

wab95

John:

Great points, and I agree with most of them. No doubt, Apple will attempt to stave off relegation to niche status, however profitable, for as long as it can against the likes of RIM and Google’s Android.

That said, I should hope that the company’s vision is broader than that of market share. The race to out-sell the competition inevitably leads to slippage in quality, to which Toyota so unwittingly contributed an object lesson. Apple’s strength lies in three areas (IMO): 1) innovation 2) quality (including aesthetics) and integration - both at the level of hardware/software and product/ecosystem; all of which redounds to a practically unmatched user experience.

This is all the more relevant as Apple has just become the largest tech company on the planet, surpassing Microsoft’s market cap by $3B.

So long as Apple balances those three assets, it will continue to win the battle for mindshare, which beats market share any day (recall that Apple was the elephant in the room at the consumer electronics show this past year even though they were not present), with the benefits this brings to profits, market cap and growth.

wab95

I should add, number 3 in my post above is ‘user experience’. I failed to enumerate it.

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