Understanding App Store: The Platform Mediated Network no one talks about!


The App Store was the first online applications store of its kind. Launched in July 2008, it completely changed the way users used the smartphones and developers interacted with their customers.

When it was launched, nobody would have imagined the impact that it would have, but it brought in a whole new way of looking at software and it altered user expectations forever.

The App Store allows users to browse and download apps developed using Apple’s iOS Software Development Kit. These apps can be either free or paid, the pricing decision depends on the developer of the app.

The developers have to purchase the iOS SDK in order to developer apps which allows them to develop apps for various devices like the iPhone, iPad and the iPod. Every app listed on the App store follows a 70/30 revenue sharing model, which means that 70% of the revenue goes to the developers and 30% goes to Apple.

In addition to this users can also buy digitised content in-app and the developer can display ads in the app.

How Apple earns money:

  • Sale of iOS SDK to developers
  • Sharing 30% of the revenue of all app purchases with the developers

How Developers earn money:

  • Sale of apps (they get 70% of the revenue)
  • Sale of digitised content in-app
  • Revenue generated from ads displayed in the app

For Apple this is easy money. They have developed a digital distribution platform for their devices which has empowered both the users and the developers. It has provided them with an endless revenue stream which has generated billions of dollars till now without having to do anything more.

How the App Store spurred a culture of entrepreneurship?

Entrepreneurs were always told that having a good product is not good enough. Marketing that product was equally important. But the App Store was changing this age old perception.

On the App Store the developers could spend 90 percent of their resources on their product and 10 percent on everything else. Before the App Store, it might have been 50/50.

It meant that developers could now reach out, and sell to, everywhere in the world regardless of where they lived.

It also meant that they didn’t have to worry about being big. As a matter of fact, it was often easier for small teams to achieve greatness on the App Store than big, established companies.

But most importantly, it meant that you could build that something you wanted to build. For the first time ever, “building something you loved” became a sustainable business model.

If you build something you loved, chances are that there were another 50 million people in the world who loved the same thing as much as you did. And because of the App Store and the environment it sprung up around itself, those 50 million people would love to hear about your app and be able to buy it from anywhere in the world.

Sources:

http://www.entrepreneur.com/article/227413

http://en.wikipedia.org/wiki/App_Store_(iOS)

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