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iPhone users creating mobile app "halo"

updated 10:40 am EST, Mon February 23, 2009

iPhone and App Prices

A new study shows that iPhone and iPod touch owners are not only frequent buyers of mobile apps but are actively driving prices down and spurring interest in app development. The findings from an ABI Research survey in November note that the iPhone's App Store is successful enough to have skewed prices of mobile apps downwards, with software often selling for $1 to $2 instead of the $7 to $25 at other stores. This encourages a large number of purchases and is said to be forcing developers to choose between price and sheer quantity.

Developers "have a 'margin vs. volume' quandary," ABI says. "Sell many copies for the iPhone at a very low price of which the developer receives 70%, or sell fewer via one of the other application storefronts, but charge a higher price and earn more per transaction."

Despite the lower prices, many iPhone and iPod users are also believed contributing to heavy spending on mobile apps as a whole. About 16.5 percent of the studied group had spent between $100 and $499 in total on apps, hinting that many of these users have bought several apps or more. The lower average price of software on the App Store and the short four-month run between its launch and November suggests that iPhone and iPod owners are aggressively downloading paid apps.

While most of the attention is going to the Apple-run service, ABI senior analyst Jeff Orr describes a "halo" as being created around third-party apps on any platform, with competitors also noticing a lift to purchases and free app downloads. He draws attention to the upcoming BlackBerry Application Center, Microsoft's Windows Marketplace for Mobile, and Nokia's Ovi Store as examples of portals that are launching in direct response to Apple's move. Google's Android Market already provides a similar front-end for phones like the T-Mobile G1.

The growth of manufacturer-run app stores represents a sharp break from the previous approach to third-party downloads, which have often depended either on third-party stores like Handango that cut royalty rates for strong sales or else downloading the software from individual websites and carrier-specific gateways.

By Electronista Staff


  1. Guest

    Fresh-Faced Recruit

    Joined: Nov 1999


    not buying it

    Sorry, I don't see any connection here at all. How does me buying apps for the iphone cause others with different devices to buy more apps themselves? Envy?

  1. jefforr

    Fresh-Faced Recruit

    Joined: Feb 2009


    the halo effect

    The halo effect mentioned by ABI Research has to do with the marketing of mobile applications done by Apple during 2008. As a result of Apple bringing awareness that smart phones can be expanded with applications, the whole industry has benefited -- a clear uptick occurred as non-Apple vendors saw an increase in app downloads and revenues.

  1. Constable Odo

    Fresh-Faced Recruit

    Joined: Aug 2007


    I'm confused again...

    I continue to read complaints from other platform owners that iPhone apps are too expensive and that X app on another platform can be had for free. They claim that Apple iPhone users are getting ripped off by being charged outrageous prices for crappy apps (games). Yet this article says that other platform dowload sites are charging more than Apple. I would say that the prices of similar games or apps at Handango are more expensive that those at the App Store. I haven't checked out other sites, though. I'll never figure how a $2 game is considered too expensive, but I hear this complaint a lot at a certain iPhone game site.

    I sure wish I knew how much revenue Apple is pulling in from the App Store. I never hear it being mentioned favorably by analysts. Maybe because the overall revenue pulled in by the iTunes store in general isn't very much and is used merely as a tool to drive hardware sales.

  1. SunSeeker

    Mac Enthusiast

    Joined: Apr 2001


    Ching Ching

    I never purchased a single ringtone or anything similar before the iphone, but have invested well over $300 into the app store, and have been happy to do so.

    Some of the purchases are no longer on my iphone, but I don't regret them.

    I continue to browse the app store, but would spend more if the itunes store experience (already the best) was dramatically improved to include tabbed browsing, favourites and demos

  1. UberFu

    Fresh-Faced Recruit

    Joined: Oct 2002


    I have yet... buy a single App from the App Store or any music from iTunes.

    I own both an iPod Classic and an iPhone 3G. Love them both - use them both daily. I have pulled down several of the demo Apps and many free-based Apps mostly playing with the new toy when I first got it. Recently I have downloaded hardly anything from the Store at all as the euphoria is wearing off. Still love both products and wouldn't trade them for anything.

    To add to SunSeeker's sentiment about the iTMS experience. I agree that it is a rather good gateway to access media titles of all types. I use it regularly for reference to something if nothing else: what was that song or that movie? Is there an App that does this or that? And so on.

    One thing I don't like about the desktop version is that it's very difficult to seperate out music only or movies only or apps only if you are searching thru the Desktop iTunes App. Apple should add in some segregation to the desktop App as it has with the iPhone experience. Not by running 2 seperate Apps on the Desktop as they have for the Music and Apps on the iPhone - but rather - "Here's the Music section and if you do a search it only shows music results. Here's the Movie/TV section and if you do a search it only shows movies/TV. Here's the App section and if you do a search it only shows Apps. Basically a much improved Filtering system.

    I know there is some advanced stuff to refine searches in the desktop iTunes App. But as Apple changed it's name from Apple Computer Inc. to Apple Inc. they should think about revamping iTunes to be called iMedia or something and change the iTMS from meaning iTunes Music Store to the iTunes Media Store.

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