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 far beyond 1 billion downloads of the more than 55,000 applications available on its site. (It passed the 1 billion mark in April.)

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.

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.

Enderle said Apple seems to allow frivolous and even objectionable applications, such as the swiftly condemned Baby Shaker app at the same time it refuses to allow legitimate GPS apps. In another example, he noted that Apple allowed users to download Slacker, a free radio service, from the App Store, but would not allow users to cache the songs on the iPhone. By comparison, BlackBerry devices allow caching of Slacker Radio songs, so that a user can play the songs even where there is no wireless service, such as flying on a plane, he said.

Google Inc., on the other hand, seems to be more careful in approving applications for its storefront, the Android Market, Enderle said. "Google seems to be more flexible with what kinds of applications they allow, but they don't allow low quality crap on their store," he said. "Apple has too much stuff that shouldn't be in the store and unevenness regarding what is allowed."

But that criticism aside, Enderle and others say the App Store has popularized the concept of quick and easy wireless access to applications that will promote the expansion of cloud computing.

"The App Store concept appears to be successful on each other platform that has tried it," Enderle noted. He also expects such retail online services to expand beyond smartphones to other platforms, such as home entertainment systems, home automation systems and automobiles.

"There will eventually be online retail promotions on whatever device an App Store is connected to," Enderle said. "It's redefined what a platform is."

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