What the Apple App Store means

The most compelling things about all those third-party iPhone apps that are coming to market? The way you’re going to buy them – and, maybe, how much you’re going to pay.
Apple earlier this year unveiled plans to launch an iTunes-like store, dubbed App Store, to support its iPhone, allowing users to shop for games, navigation tools and other applications the same way they browse for digital music. The outlet could explode into a $1.2 billion business by the end of 2009, Piper Jaffray analyst Gene Munster has predicted, with perhaps 95% of users downloading two applications a year.
Munster’s forecast may be far too rosy, given that the analyst used Steve Jobs’ figures regarding adoption rates and that Munster himself has claimed that 70% of iPhone apps are likely to be free (the result of an informal survey he took at the recent Apple developer conference). But the excitement surrounding Apple’s strategy underscores the glaring need for a new distribution channel in the space.
There is no dearth of applications for smartphones, as a quick check of the storefront Handango.com illustrates. Weight-watching BlackBerry Curve users have more than a half-dozen options for using their handsets to help stay fit. Want to monitor expenses on your Nokia N95? You have twelve applications to choose from. And Handango offers an astounding 18,000-plus titles for Windows Mobile users, covering everything from stock-trading to gardening.
Ask a casual, smartphone-toting consumer about Handango, though, and you’re likely to get a blank stare. Same with Handmark, Clickapps.com, or any other leading retailer of smartphone software. While a few vendors have made strides carving out market share among techie geeks and high-end business users, they have yet to make a dent among consumers who still use their smartphones primarily to make calls and check e-mails.
An Apple-branded storefront could move OS-based, third-party software into the mainstream, though. Not only would Apple’s App Store benefit from the white-hot device it supports, Apple may also back the effort with its impressive marketing muscle. And the company has already proven it knows how to build an intuitive, attractive virtual store (meaning, iTunes).
Whether the second-generation iPhone can make a dent among business users has yet to be determined, , as Gartner has pointed out. But a high-profile storefront – with plenty of free or low-cost applications on the shelf to draw users – is just one more reason for users to consider the device, and for developers to join the fold.