Wildly successful iPhone App Store hits its first year

Its achievement has led to similar stores by its rivals

When Apple Inc.'s iPhone App Store celebrates its first full year in business on Saturday, it will have surpassed 1 billion downloads of the more than 55,000 applications available on its site.

In terms of sheer numbers, the App Store's success is staggering, and it has led to nearly every maker of a smartphone operating system to mimic the concept of making it easy to purchase and wirelessly download software from a third-party developer.

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In the past year, Research in Motion Ltd., maker of the BlackBerry, Microsoft Corp., maker of the Windows Mobile OS, Google Inc., backer of the Android mobile platform, and Palm Inc., maker of the Palm Pre and WebOS, have all launched application storefronts.

The App Store concept "is the future of the software market," said Rob Enderle, analyst for the Enderle Group. "It changes the model. We live in an online world and App Store anticipates at some future point that we won't be buying software in a store."

To be fair, Handango Inc. holds the title as the original application store for smartphone downloads, analysts noted. The company celebrated its 10th anninversary in January, and said it was offering 140,000 applications with more than 100 million downloads, supported by almost 1,000 devices.

Ironically, the fact that Handango works with so many devices could dilute its impact, while Apple's store has taken on more value partly because of its exclusive connection to the successful iPhone.

Enderle and other analysts noted that most of the applications in the App Store are games or social networking applications, but a significant number of the 55,000 apps are useful for health and business professionals. More than 1,000 applications are devoted to business productivity, while more than 600 can be used by doctors and patients to monitor health conditions or check quickly for drug interactions.

The App Store has been called "revolutionary" by Apple executives, but Enderle and other analysts wouldn't go that far, nor would they say the App Store is completely a hit.

"It's a great thing for Apple, and has established a whole ecosystem around the iPhone, but I'm not sure how much money the developers selling applications on it are making," said Jack Gold, an analyst at J. Gold Associates.

Apple didn't respond to a request for comment, but the company has consistently shown an interest in fostering third-party development, and has even added more than 1,000 application programming interfaces (APIs) to its iPhone OS 3.0 software, including the ability to make purchases from inside an application.

Ramon Llamas, an analyst at research firm IDC, said the App Store is a reminder to the entire industry that "content is king," even if it's being sold on a cool interface like the iPhone's.

"Handsets are handsets are handsets, and unless you have a compelling experience onboard, you don't go anywhere," he said.

Gold added: "Users want to be able to do more than surf the Internet and make calls."

But the App Store still has a ways to go in providing content. Gold said he questions how often applications purchased in the Apps Store are used. And Enderle said he has found that "90% of the apps in there are crap," meaning they have a quality control problem.