By contrast, Steve Jobs initially eschewed native apps for the iPhone, claiming that Web 2.0 apps, delivered via HTTP, would provide all the functionality mobile users required. But within weeks of Apple's 2007 iPhone shipping, hackers had unlocked the device and ported Linux's APT utility as a program named Installer, letting users install native apps directly on the iPhone.
Shortly after, iPhone and open source developer Jay Freeman (aka Saurik) launched the Cydia app installer (and later Cydia Store), another open source tool that ultimately would become a rogue application sales competitor against Apple in 2009. Apple apparently saw the value of native apps and, rather than ceding the ground to jailbreakers, launched the iPhone App Store in July 2008. iPhone app development blossomed, and when Apple shipped the iPad last year, most iPhone apps immediately became available to iPad users.
That success set the stage for the app store concept's adoption by every major platform vendor, to varying degrees. (As a consequence, Apple has taken the offensive against competitors by trying to trademark the "app store" term.)
The new cost/revenue equation
The primary attraction for developers of Apple's Mac App Store -- the 800-pound gorilla today -- is the collection of 200 million Apple ID accounts, complete with credit cards, primed for one-click purchases. The developers of Pixelmater, a $60 image-editing tool, learned this well when it grossed $1 million in just 20 days of Mac App Store exposure.
But to get to this market, developers have to set up a separate payment, download, and update mechanism for each app store. In the case of the Apple store, it also means jumping through a lot of hoops ostensibly meant for quality control.
Developers do set their own prices, and although many apps have iOS-like sub-$10 pricing, quite a few cost hundreds of dollars. However, Apple strongly suggested that the App Store audience deserves a lower-priced product when it dramatically cut the price of its own Apple Remote and Aperture apps in the Mac App Store. Apple also unbundled the $80 iWork package of Keynote, Numbers, and Pages into separate $20 App Store products.
Those lower prices don't necessarily mean less net revenue for developers. Using the App Store can lower a developer's delivery costs by a few percent compared to physical product delivery such as in physical retailers or mail-order sales. That can add up to a significant cost component, at least for inexpensive programs. "We take home a bit more from the App Store," says SmileSoftware founder Greg Scown. "Basically what we see is the App Store replacing the retail box channel, doing so in a broader way than retail ever did, but not replacing the Web channel."
Apple's iOS App Store drew a legion of first-time developers, who leapt at the opportunity to focus on development rather than sales. Similar benefits accrue to nascent Mac developers: By letting Apple handle the sales cycle, product delivery, serialization, and DRM, new (to the Mac) developers can shorten the time to market dramatically. However, Apple's sales processes don't replace advertising. "The App Store is not a substitute for marketing -- you still have to advertise, cultivate communities, and support users," Scown says.