By Todd Bernhard on Tue, 03/25/2014
In an article posted by Apple Insider, an analyst estimates that 20 percent of Apple's profits could come from iTunes and the App Store by 2020. Now that includes music, movies, and TV shows, but it's worth remembering that Apple originally had no plans for the App Store. When the iPhone was introduced, Steve Jobs' response to requests for third party apps was to recommend web apps using Safari. But Apple changed gears a year later and the App Store was introduced. The world has never been the same.
A few years later, and Apple changed their name from Apple Computer to just Apple. This reflected their change not just from a computer provider to a Consumer Electronics provider, but also to a media provider. Apple's iTunes changed how the world consumes music and the App Store changed how we buy software. In fact, thanks to free apps, we often don't even buy software. Still, there is money to be made in Apps as this chart from Apple Insider shows:
Apple still makes the lion's share of their revenue from hardware, but hardware costs a lot to build. Software, especially apps written by independent developers, is much more profitable. The same is true for music, movies, and TV shows. Apple makes a nice 30 percent cut of iTunes sales in exchange for providing their sizeable distribution mechanism.
In an era where many firms are valued for far more than their actual income (Facebook bought WhatsApp for $19 billion for example) it's refreshing to see real profits being reported by a technology company. And as an app developer, it's reassuring to know that Apple will be looking for more revenue from the App Store!