If this is the way it is on the ultra-successful iPhone, can you imagine what it is/will be on other platforms?

Full Analysis of iPhone Economics – it is bad news. And then it gets worse

[…]1.43 Billion dollars divided among 164,000 actual paid apps gives the average app the revenue of $8,700. After Apple takes its 30% or $2,600 we are left with $6,100. That was over a two year period, so an average paid iPhone app earned six grand to its developers, ie in one year, they earned $3,050. This is the average, remember, it is not the median. The average skews too high because of the long tail.
Supercollider Blog reports on several levels of paid app downloads, the relevant number is that half of all paid iPhone apps get less than 1,000 downloads. The median point is under 1,000. Lets call it 999. That number times $1.95 per paid app gives the ‘most typical app’ the total revenues in its lifetime – the full two years of App Store existence – of $1,948 dollars. This is before Apple takes its cut of 30%, so we are left with $1,363 over two years or $682 per year. This is so ‘successful’ that half of all of the developers of the 164,250 apps – will actually earn LESS THAN THIS. Before you start to cry, remember, there is that Angry Bird game that had 4 million paid downloads and the Bewelled 2 game with 3 million paid downloads. Thats your math there, they are totally skewing the averages, and you are stuck in the ‘long tail’ indeed. Half of all developers will earn less than $682 per year. Do you still think this is a good business idea?

And at this point he’s not done yet. Yup, it gets worse as he looks at the cost of developing apps. He then does go into how to make real money (billions) from mobile apps.

  1. Hmeyers says:

    C’mon don’t let facts get in the way of people’s dreams!

  2. KMFIX says:

    Seriously? SERIOUSLY??? If I didn’t know some very successful people that have made a lot of money selling iPhone apps, I’d probably believe this article.

    Then again, those were very creative people with good ideas. Not everyone is like them.

    Just like the rest of the world.

  3. Dingman says:

    Jeesh, can’t people do math anymore.

    1.43B split among 164,000 apps IS $871,951.00 !!!!

    NOT $8700. Maybe there’s a misprint?

  4. jescott418 says:

    Actually its probably worse for some. Because you averaged out accross the board. Although we know only certain applications really make any good money. But then again, many of the paid applications are crap and poorly supported. But I guess if your making crap to develop them then I guess that is what you get.

  5. Maricopa says:

    #3 Dingman.
    Can’t people do math, anymore?
    Maybe you should check yours.

  6. ECA says:

    And proof it dont work..
    YES, the TOP made money and the BOTTOM made NOTHING..

  7. Me-Mongo says:


    Using Windows Calculator, I get this:
    From the article
    8,700 * 164,000 = 1,426,800,000

    From you
    871,951 * 164,000 = 142,999,800,000

    I realize that the Calculator has had some flaws in the past, but I don’t think there’s a problem with it here.

  8. WmDE says:

    A Billion is not equal to a Billion.

  9. dingman says:

    Too early in the morning, sorry.

  10. qb says:

    News flash. Making money on software is really, really hard. Who knew?

    Desktop, web, consoles, and mobile. They are all tough. It will even tougher to make money on software for TV’s too.

  11. chuck says:

    Here’s some easier math: if you write software and sell it for $1 per copy, you will need to sell millions to make $$millions.

    I wonder how EA justifies it’s iPhone and iPad apps? Need for Speed on the iPad is $12.99. The PS3 version is $60. I wonder which one EA makes a bigger profit on?

  12. admfubar says:

    can someone explain, why there ARE apps???
    remember that the web 2.0 promise was everything was gonna be done in the browser? so why are there apps??? it is just a way to get a couple more bucks outta ya..

    scarier if that the data connection is becoming the new $5,000 gal ink…

  13. MrMiGu says:

    #12 admfubar:

    If apple allows everything to be done from the browser that would mean they couldnt take their cut. (And they would have to figure out how to support flash)

  14. deowll says:

    Writing aps is rather like singing, playing an instrument, or acting. The supply vastly exceeds the demand. The best or best known ap can squeeze everybody else out of the market and make the effort invested to create them a complete waste of time and money,

    On the other hand when I went looking for low end video editing and burning software to use on my high end windows 7 64 machine working with HD for under $150 a careful review of what was said about them left me thinking that the best option was still going to be to copy the file as is to a DVD a few times and hand the DVDs to those who were interested.

    Much of software seems to crash rather often, doesn’t really work well with anything after XP, can’t take advantage of a high end machine, isn’t all that good with HD to start with, etc.

    The makers advertise a lot but they don’t seem to have people working full time on making the product better and it doesn’t seem to be much better than free ware which seriously bleeps.

    You can end up going through three or four mini programs to make a stack of DVDs the easiest that will run on a DVD player hooked to a TV. To much work and not enough fun.

  15. ZZman says:

    Wow, if iPhone app developers make that little money, I’m not a bit surprised why my friend who used to do Symbian and now does Android apps calls it a hobby.

  16. boyfarrell says:

    I think this article misses the point.

    There are developers that builds apps for fun, they have other full time jobs. There are developers that code full time.

    Who cares how much money the first lot makes, it’s the core developers that keep any platform going. They simply wouldn’t do it if they couldn’t pay the builds and eat! They would be dead.

  17. NobodySpecial says:

    Nobody worked out how to charge for the web.

    Most of the ‘successful’ apps on the appstore are merely readers for popular web sites. Charge $10 for a bbc/newsweek/wsj reader app rather than have a paywall it’s the easiest way to get people to pay for content

  18. cgp says:

    Look folks (as 44 would say)

    an apple iphone app should really be compared with a web page. There will be millions of them. Some will be true applications in the sense of a lot of in-house technology, built at great expense. These will not have the 0.99 dollar price tags.

    The market will be huge, app store search will replace google search (see Jobs persistent rant on apps replacing search).

    But the biggest benefit is that the current generation of AJAX jacks will be replaced with tight local cpu et al processing loops.

    We have come back full circle to the correct interconnect with the internet. Byebye browser app BS.

  19. cgp says:


    the iOS platform will be the major monopoly for huge markets such as gaming and robotics. Nintendo and sony will lose big time here, only the full power console market will thrive, but that has a problem with original and non-repetitive content creation costs etc.

    I cannot wait for robot chassis kits to come out, where you would place two iphone4s as 3d eyes and brains. Imagine being able to get cheap muscle motors (not those wire things, rather motors made to be like muscles with resistive counter springs- there was a MIT walking robot research stuff a few years back).

    You would grab several of these, and make your own robot chassis. The key component would be an open source cyperkinetics API that would have will the physics and internal body-knowledge determination and constraints required for walking etc. This would far exceed that dopey old Sony bot thingy.

  20. cgp says:

    Sorry that dopey old Sony bot thingy, was actually the Honda Asimo.

    This is a totally closed system. Any technical information other than external functionality is proprietary.

    Any opening up of Asimo OS, please inform us all.

    Those iphone4s’ have enough sensors and possibly CPU power to do some serious robot stuff.

  21. ScotterOtter says:

    Haha, obviously written with an engineer’s mentality. Apply a simple 80/20 rule and the average earnings are $35,000 per LEGITIMATE dev.

  22. Rick Cain says:

    Why does Apple have to take a 30% cut in the first place? Oh, because they’re worse than organized crime, which generally only takes a 20% cut.


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