Apple’s iPhone App Store allows third-parties to release software for the iPhone (built with an API provided by Apple) to all iPhone users. They can charge what they want for the app, and delivery and payment is managed beautifully within the iPhone interface through your iTunes account.
The true genius behind the system though, is that Apple takes a small percentage off the top of each application sale.
By providing the medium (iPhone) and the delivery service (App Store), Apple has created a completely self-sustaining business model that generates passive income for them and increases demand for the product with each awesome release on the App Store.
So What’s Coming?
Well, with the upcoming mass rollout of Android, Google’s linux-based cell phone operating system, a simlar App Store-like service will be available. I’m not sure that anything official has been said on the subject, but I would predict that Google will not be skimming off the top of these app sales. What this means for Apple is that developing for Android will return a higher margin. Of course, the benefits will greatly depend on the success of Android, while the iPhone has already been proven as a viable development platform.
So, it will be fun to see what the future brings. I still don’t have an iPhone and will probably hold out for AT&T to release an Android phone. Between this upcoming competition and Verizon’s plans to completely open its network, the mobile phone world is heating up. I’m excited for the potential consumer benefits.