Apple iPhone Apps A $1 Billion Market Next Year? (AAPL)

Dan Frommer | June 11, 2008 1:14 PM

iphone-pong.jpgPiper Jaffray Apple analyst Gene Munster puts a dollar value on Apple's new iPhone/iPod touch software market: Up to $1.2 billion in retail next year. That doesn't actually mean much for Apple's financials: Up to $360 million in revenue, and $250 in operating income next year. But still impressive for a business that won't exist for another month.

How does he get there? Munster estimates a total market size of 85 million iPhone and iPod touch owners by the end of 2009. (Gene, a longtime Apple bull, assumes Apple will sell 45 million iPhones next year.)

In his "neutral" case, he assumes 91% of those 85 million people will use the app store, and that they'll spend an average of $10 per year on software -- basically, that they're buying an app or two per year. That's a $777 million market; Apple's 30% cut is $233 million. At a 60% operating margin, that's $163 million in operating income -- a 2% addition to his estimate for Apple's calendar 2009 operating income.

In his "aggressive" case, he thinks 95% of iPhone/iPod touch owners will use the app store, spending an average $15 each. That's a $1.21 billion market; Apple's 30% cut is $363 million. At a 60% operating margin, that's $254 million in operating income -- or a 3% bump for Apple.

Plausible? No idea: These mini-programs, while impressive so far, are basically a new market, and we don't know if a generation used to getting just about anything they want on the Web for free will actually shell out a few bucks for software. And getting them to buy something for their phone is no easy task.

While 45% of smartphone users, for instance, play a game on their phone once a month, only about 9% of overall U.S. mobile subscribers do, according to research firm M:Metrics. Apple's built-in advantage, which could jack those usage rates: Using iTunes -- which already has your credit card info, and which people are already used to using for music downloads -- for its mobile apps store.

See Also:
Apple Launches iPhone Platform, Apps Pour Out Of Woodwork
iPhone Developers: The Phone’s Great. What About The App Store?
Major League Baseball's iPhone App: Mobile TV That Makes Sense

Subscribe to SAI: RSS, email newsletter (no spam)

More:

Share:
Post to Del.icio.us


< Prev. Story
Next Story >

32 Comments

jay said:
The citi analyst is really pumping aapl, calling 289 by end of yr.
Darren said:
91% fill purchase from the App Store? Hardly. 100% of iphone users are currently getting by with no purchases from the app store. Apple will be lucky if 50% of those users purchase from the App Store.
JakeW said:
As always, the deciding factor will be how easy it is for consumers to find, download, pay for and install additional apps. Convenience often trumps $$, and most current offerings are laughable. If Apple can swing all this (and ease of use is definitely one of their big strengths) we may well see a revolution that dwarfs the music scene in comparison.

I'm far from a fanboy, but my bet is definitely on Apple for this one. - J.
Zoe said:
45 million iPhones in 2009?

91% will buy additional apps?

Are these numbers pdooma?


Greg (URL) said:
Personally, I think the rates of AppStore usage here are right (it's a prominent icon on the phone and will get a ton of press), but the rates of purchase are probably wrong - it looks like there will be many compelling products released for free and I suspect a great many users will just get by with those. Payment for anything is a big psychological barrier, even with Apple's UI.
Gubatron (URL) said:
Apple Store, no way.

I think the magic will come from web based services.

Think of many location based services that could work either on ads (think full screen ads like interstitial ads for forbes.com but on the screen) while you wait for responses, or that are so good that you could sign up for yearly fees.

The web is finally on the streets, we're not gonna be buying what we can get for free, I don't see why the free model won't apply on the iphone.
Tim F. said:
@Gubatron You can keep the web open 24/7 and stare at it as you walk down the street if you want, but I think you'll be alone doing it.
Mark Sigal (URL) said:
While it is easy to pick apart Munster's model given the amount of moving parts and the fact that the AppStore hasn't even launched, I wouldn't throw the baby out with the bathwater. The marriage of iPhone SDK with AppStore as marketplace, e-wallet and distribution channel is a game changer, IMHO.

If you watched the demos in the keynote, it is not hard to see where gaming, entertainment, productivity and vertically focused apps grow into a huge business.

Having bought many a song via the iTunes wireless store, I can tell you that the joy of instant and over-the-air will overnight open the door to all sorts of impulse-buy, micro-transactions.

For what its worth, I have done a fairly lengthy analysis of the keynote called:

iPhone 2.0: Swinging for the Global Fences
http://thenetworkgarden.com/weblog/2008/06/iphone-20-swing.html

Check it out if interested.

Mark
Anton said:
91% seems aggressive and maybe the wrong number of focus on. How many apps per user makes more sense. Overall pentration is too far downstream.

Anton
spencer said:
Why would anyone want to buy apps. you can get it all for free by jailbrakeing your iphone/itouch. go to www.ziphone.com
jason said:
wow gene has gone off the deep end. those are by far the silliest numbers i have ever read in an actual research report. what about the millions of unlocked/jailbroken iphone users who are currently spending $0 on iphone apps and will likely continue to do so? we need to have a new generation of research analysts who understand how the current world works
mark said:
If most AppStore apps are $9.99 or less, I could see lots of people buying something. It'll become an impulse purchase, just like for music, TV shows, or movies from the iTunes Store, or ringtones or games for other cell phones.

I usually don't buy anything, but even I'm tempted to buy some of those demoed games at $5 or $10 a pop. Especially when DS/PSP games are going for $20 to 40 a pop.
Tim F. said:
@jason That's an interesting question. Can you restore an iPhone, upgrade, then jailbreak, and then use the App Store? Those users may still prefer installer.app, but I don't see why they wouldn't want to sample a more select offering too.
AdamC said:
I believe the student population is good enough to put a small fortune into Apple's and the apps developers' pockets.
BTW the Iphone which is a smartphone now costs $199 and at that price it is good enough for mass consumption. Also it is available worldwide.
anton said:
Wildcard....*.*

Apple iPhone developers actually get paid to write apps (unlike FB)...who knows what that could unlock.
Bahmin' Brahmin said:
Dan -

Isn't using an EoY number of phones to arrive at that year's rev number kind of silly? In his conservative case he believes that 55M phones at EoY09 will generate $416M in 2009 revs (55M x 75% x $10/user).

That's nuts.

If they have 55M phones at EoY it means that they'll have 32M phones on average in the year (start with 10M end with 55M) at best, since we all know they'll sell 50% of the year in Q4.

So, call it 30M average devices in 2009 and you're getting closer. 30M x 50% x $5 or $75MM is my top line guess.
Ruben Zevallos Jr. (URL) said:
Well, I think it's possible, because Apple is spreading it's iphone over the world and here in Brazil, I have lot's of friends waiting for Claro to start to sell it. About Apps, my company is researching how to use IPhone's processing power and tools...
ej said:
The Slingbox app sounds cool, but others don't seem worth $9.99. I'm not a gamer, so that doesn't appeal to me, and I don't know why I'd need to pay to take a photo of a movie poster to get more information about it. Cool, but not worth of spending money.
william said:
I think the guy's numbers are ridiculous, but the basic idea of Apple selling a lot of phones and a lot of apps to go on those phones is sound. I am really looking forward to some of those great apps.

I think that usage patterns for other smartphones really don't mean much. There was no real legal online MP3 market before Apple made the iTunes Store. In similar fashion, Apple will make buying and installing apps on the iPhone so easy, and the apps will be sufficiently compelling that people will buy lots of them. Not only that, but folks who otherwise would have been happy with an 8gb (or 16gb) iPhone will clamor to pay more for a 32gb (or bigger) iPhone. I assume the only reason there isn't a 32gb phone announced is so they can be more certain of having enough chips to meet demand at the lower capacities. Analysts should expect more of the 16gb phones and not so many 8gb phones, at least in the more prosperous markets. IMO.
larry towers said:
"impulse-buy, micro-transactions"

$5-$10 is not yet a micro transaction.
simlare said:
mp4 converter for mac allow you to trim videos, crop videos and apply special effects to videos.
charlie said:
mac dvd ripper share free…
selamler (URL) said:
sohbet chat sohbet chat çet sohbet chat özcan sarıca ile kurtlar vadisi pusu 3.sezon 1.seo yarışması aytug akdogan ödüllü 1. seo yarışması ve yurtta barış dünyada barış sesli chat sesli sohbet sesli görüntülü chat görüntülü sohbet kameralı sohbet kameralı chat bayan arkadaş görüntülü çet sesli muhabbet kızlarla sohbet kızlarla chat kameralı çet kameralı sohpet kızlarla çet chat gizli kamera güvenlik sistemleri kamera güvenlik kamerası cilt bakımı cilt bakım ürünleri ıslak mendil kolonyalı mendil kolonyalı mendil güvenlik kamerası gizli kamera kamera canlı sohbet sohpet sohbet sesli sesli chat sesli sohbet kameralı sohbet kameralı chat görüntülü chat görüntülü sohbet bayanlarla sohbet sesli muhabbet bayanlarla chat kızlarla sohbet bayan arkadaş görüntülü çet sesli çet sesli sohpet seslichat sesliçet kameralı sohpet kameralı çet kızlarla sohpet kızlarla çet sesli sohbet sesli sohbet sesli sohbet sesli chat sesli chat chat çet ek iş ek gelir mirc avşa adası avşa avşa adası avşa tatil tatil köyleri "Trkycmhrytllbtpydrklcktr" Trkycmhrytllbtpydrklcktr Trkycmhrytllbtpydrklcktr "Trkycmhrytllbtpydrklcktr" "Trkycmhrytllbtpydrklcktr" Trkycmhrytllbtpydrklcktr özcan sarıca ile kurtlar vadisi pusu 3.sezon 1.seo yarışması özcan sarıca ile kurtlar vadisi pusu 3.sezon 1.seo yarışması aytug akdogan ödüllü 1. seo yarışması ve yurtta barış dünyada barış aytug akdogan ödüllü 1. seo yarışması ve yurtta barış dünyada barış "adtech ile reklam 2.0 dönemi başlıyor ve Trkycmhrytllbtpydrklcktr r10.net seo yarışması" adtech ile reklam 2.0 dönemi başlıyor ve Trkycmhrytllbtpydrklcktr r10.net seo yarışması adtech ile reklam 2.0 dönemi başlıyor ve Trkycmhrytllbtpydrklcktr r10.net seo yarışması "adtech ile reklam 2.0 dönemi başlıyor ve Trkycmhrytllbtpydrklcktr r10.net seo yarışması" "adtech ile reklam 2.0 dönemi başlıyor ve Trkycmhrytllbtpydrklcktr r10.net seo yarışması" adtech ile reklam 2.0 dönemi başlıyor ve Trkycmhrytllbtpydrklcktr r10.net seo yarışması ıslak mendil ıslak mendil kolonyalı mendil kolonyalı mendil paketleme ambalajlama paket web tasarım seo refreshing towel perde tatil kozmetik haber joy türk radyo aşk haber video tatil tekstilkent yabancı personel çalışma izni ikamet tezkeresi teşvik belgesi yabancılar çalışma izni danışmanlık iso 9001 iso 14001 ohsas belgesi yabancı çalışma izinleri teşvik belgesi ilaç ruhsatı turizm belgesi kamera kamera kamera kamera driver perde iso 22000 haccp teşvik belgesi yabancı personel çalışma izinleri kapasite raporu kobi kredisi yurtiçi nakliye iso kalite türkiye iso kalite haccp belgesi ohsas belgesi yabancı sermaye teşvik kredisi teşvik kredisi garanti belgesi turizm belgesi teşvik belgesi yatırım teşvik belgesi iso 9001 belgesi göğüs büyütücü kremler leke giderici kremler bitkisel cilt bakım ürünleri leke giderici ürünler botoks botox güvenlik kamerası güvenlik kamerası güvenlik kamerası güvenlik kamerası gizli kamera gizli kamera gizli kamera gizli kamera perde avsa otelleri istanbul otelleri joyturk iso 22000 haccp kapasite raporu yabanci personel calisma izinleri kobi kredisi kobi kredisi iso kalite iso kalite belgesi haccp belgesi ohsas belgesi yabanci sermaye iso 9001 yatirim tesvik belgesi iso 9001 tesvik belgesi turizm belgesi garanti belgesi tesvik kredisi arazi borsasi arazi bankasi arazi borsasi arsa borsasi arsa borsa avsa dunyasi bitkisel ilac bodrum otelleri boya ustasi boya ustasi bitkisel ilac bitkisel ilac ced raporu degerinde arsa dekorasyoncular dokumculer economy consulting elektrik ustasi emlak bankasi emlak borsasi estetikciler galvaniz kaplama galvaniz kaplama garanti belgesi garanti belgesi gayrimenkul borsasi gayrimenkul ikamet tezkeresi iso 2200 haccp iso 2200 haccp iso 2200 haccp iso 2200 haccp iso 2200 haccp iso 2200 haccp istanbul otelleri istanbul otelleri istanbul gayrimenkul ithalat izni kalipcilar kanser ilaci kanser ilaci kapadokya otelleri kapalicarsi borsa kapalicarsi emlakci kaplamaci kaplamaci kaplica otelleri kelepir arsa klima servis klima servisi klimacilar klima klima servisleri kobi kredisi konserveci konserveci konserveci magaza dekorasyon makarna ofis dekorasyon ohsas belgesi/a> otel ekipmanlari oto yan sanayi personel servisleri plastik cerrahi rahim kanseri satilik arsa seker hastaligi sut urunleri tesvik kredisi tesvik belgesi tesvik kredisi turizm belgesi turizm isletme belgesi turkey economy turkey economy consulting unlu mamul unlu mamuller turizm belgesi unlu mamul villa dekorasyon yabanci calisma izni yabancilar calisma izni yapi malzemeleri yatirim tesvik belgesi etiket haccp belgesi haccp belgesi hibe tesvikleri ohsas 18001 ohsas belgesi ohsas belgesi tarim tesvik tesvik tesvik tesvik belgesi tesvik belgesi tesvik belgesi tesvik belgesi tesvik belgesi yatirim tesvik belgesi yuksek tansiyon


sohbet
chat
chat
sohbet
sohbet
chat
adtech ile reklam 2.0 dönemi başlıyor ve Trkycmhrytllbtpydrklcktr r10.net seo yarışması
özcan sarıca ile kurtlar vadisi pusu 3.sezon 1.seo yarışması
kurumsal danismanlik
sesli sohbet
gizli kamera
güvenlik kamerası
cilt bakım ürünleri
welcome to wow gold,world of warcraft gold,warcraft gold,world of warcraft gold,wow leveling, the cheapWoW Power Leveling, service site,world of warcraft WoW Power Leveling,fast and secure service.we WoW Power Leveling, WoW gold isn’t found everywhere in the game; WoW Power Leveling,you have to look for it and, when you find it,WoW Gold, you have to save it.WoW Gold,WOW goldis earned through doing things like killing enemies, WoW Gold, hunting and crafting. WoW Gold, is for sale online at a number of locations. buy WoW Gold,The decision wow gold,wow gold to buy wow gold is one Cheap WoW Gold, that many video gamers wrestle with. Cheap WoW Gold,Many World of Warcraft players try to play the game on their own wow power level before making the decision to buy wow gold. Cheap WoW Gold,If you wow gold,want to buy Cheap WoW Gold,wow gold there is nothing wrong with it.WoW Gold, Buying wow gold is similar to finding cheat codes WoW Gold,World of warcraft Power Leveling,World of warcraft Power Leveling,age of conan gold,aoc gold,buy aoc gold,cheap aoc gold,aoc power leveling,age of conan power leveling,aoc power leveling,aoc gold,age of conan gold,age of conan power leveling,maplestory mesos, maple story mesos,maple story mesos,maple story mesos,maple story mesos,Maple Story mesos,MapleStory mesos,ms mesos,mesos,SilkRoad Gold,SRO Gold,SilkRoad Online Gold,eq2 plat,eq2 gold,eq2 Platinum,EverQuest 2 Platinum,EverQuest 2 gold,EverQuest 2 plat,lotro gold,lotr gold,Lord of the Rings online Gold,oil purifier,rolex replica,replica rolex,chongqing,yantai,evening dresses,evening gowns,wedding dresses,bridal gowns,wedding gowns,cocktail dresses,Bridesmaid dresses,prom dresses,formal dresses,Promotional items,Promotional products,Wedding dresses,Pet supplies,Dog clothes,Replica handbags,Replica Watches,wedding cake toppers,cake toppers,digital cameras,digital camera,warhammer online,war gold,digital cameras,digital camera,Mobile Phones,Mobile Phone,Cell Phones,Cell Phone,Mp3,world of warcraft power leveling,world of warcraft power leveling,power leveling wow,power leveling wow,power leveling wow,cheap wow power leveling,cheap wow power leveling,cheap wow power leveling,buy wow power leveling,buy wow power leveling,buy wow power leveling,power leveling,power leveling,power leveling,power level,power level,power level,
通販 said:
今日みつけたサイトは賃貸 住宅も収益物件も不動産 賃貸も賃貸マンションも新築マンションもしっかりカバーしてありすごく充実したさいとでもちろん投資を目的の方やリフォームをしたい人もすごく参考になるだう。ところで今,SEO対策などいまはやっているがホームページ制作会社にいらいしてもうまくはいかないようだ。
brianne (URL) said:
640-802 Apple iPhone Apps A $1 Billion Market Next Year? (AAPL) Hard to pass up. Clothes on sale are hard to pass up. That's bullshit.
sesli chat (URL) said:
Видно что автор не обижен интеллектом Видно что
sesli chat (URL) said:
http://www.canimchat.com

Join the discussion



Copyright © 2008 Silicon Alley Media, Inc. All rights reserved. Registration on or use of this site constitutes acceptance of our Terms of Service and Privacy Policy.