Piracy May Have Cost Apple, iPhone Devs $450 Million

Software piracy may have cost Apple and iPhone application developers some US$450 million in lost sales so far, according to a 24/7 Wall St. report.

The group based the loss figures on the number of applications sold through Apple's iTunes-based App Store since its launch in July 2008, and an average $3 app price.

So far, pirating iPhone and iPod touch applications first requires jailbreaking, or hacking the device to allow the installation of applications that haven't gone through Apple's review process and aren't available at the App Store. Once jailbroken, users that know where to look can find versions of apps available through the App Store with the built-in copy protection stripped out.

While some of the information used to find the $450 million loss figure comes from App Store sales estimates and the number of iPhones that have already shipped, some data points came from developers that included code in their apps that reports back from pirated copies.

About 75 percent of the copies of the iPhone art creation app Layers, for example, are apparently pirated, and some 95 percent of the copies of Fish Labs' Rally Master Pro 3D are pirated. What the report doesn't address, however, is that historically many of the people that pirate applications wouldn't have paid for them no matter what they cost.

While it's unfortunate that application developers aren't paid for every copy of their products that make it to user's Macs and iPhones, the actual cost in lost sales is probably lower than 24/7's estimated $450 million since many of those installed copies never would've been purchased.