Apple's App Store turns five: You're great, now change

Apple's App Store has come a long way since its launch in 2008.

(Credit: Apple)

What a difference five years makes.

Apple's App Store has a lot to brag about as it celebrates its fifth birthday on Wednesday. Over the last half decade, it helped fully realize the Swiss army-capabilities of the smartphone, which could do far more than make phone calls and browse the Internet. While not the first, it set the standard for mobile application marketplaces to come. The best part: it made apps accessible to everyone.

"Nothing like the App Store existed before and it has fundamentally changed the world," Apple Chief Executive Tim Cook said last month, describing the store's launch at the company's yearly developer conference ahead of today's anniversary.

But things have changed since the App Store was first introduced by the late Steve Jobs, and Google Play has surpassed the App Store when it comes to sheer number of available apps. While Apple's App Store has always been home to the hottest big-name apps, its success over the next five years may be shaped by how well it can foster apps both big and small.

"It winds up being a popularity contest rather than people finding the content that they want," said Brian Blau, Gartner's research director of consumer technology. Users are exposed to the top few thousand most popular apps, he added, so apps must compete for rankings or to get promoted as, say, a staff favorite. That disenfranchises all the apps without brand recognition or marketing firepower.

For now, Apple has a lot of impressive numbers to tout. Its App Store has surpassed 50 billion apps downloaded, with 900,000 programs available. Apple brags it's paid out $10 billion to developers, testament that it pays to work with the company even as it takes a 30 percent cut of sales.

Apple has done a great job attracting the developers, Blau points out, by being the leader for developer revenues.

As a result, the iPhone franchise remains the envy of the smartphone industry, even as rival Samsung Electronics has made significant headway with its own flagship Galaxy S family of phones. In the U.S., iPhone sales still dominate, fueled at least in part by the breadth of apps.

What Apple did differently
It's easy to forget that Apple wasn't the first app marketplace. The App Store had precursors from the likes of Palm, Microsoft, and Salesforce.com's AppExchange. Jobs was friendly with Salesforce.com founder and CEO Marc Benioff, who had already taken over the "appstore" domain and trademark. When the time came for Apple to launch its App Store, Benioff gifted them to Jobs in a gesture of gratitude for Jobs advice to his team years before.

But Apple did something different with its App Store: it made it accessible to everyone. By offering the apps in a single, simple store, and making it easy to download and run programs, Apple sparked a new market. Sure, BlackBerrys and Windows Mobile phones could download their own apps, but users had to dig for them at different Web sites, and there was no real guarantee they would work well.

Apple, however, kept a tight rein on the kind of apps it would approve, and even offered its recommendations. It was a safe and convenient place for smartphone users who didn't want to deal with the headaches of downloading programs on other mobile platforms.

The App Store's featured apps.

(Credit: Screenshot by Jason Parker/CNET)

Analyst Al Hilwa, director of Applications Development Software at IDC, called Apple's idea of integrating a store into iTunes, which was already providing a tracking content and handling transactions for music, one of the strokes of genius that contributed to the success of the iPhone. Opening the platform up for app developers was another brilliant move, he said. iOS remains popular with developers not just because it's lucrative but also because of the simplicity of building for one line of smartphones.

While older smartphone marketplaces had an array of rudimentary games and business apps, Apple's App Store opened the door to all kinds of different programs. All of a sudden, fart apps were making a small fortune as users were eager to find new and innovative ways to use their smartphones. Games such as Rovio's Angry Birds became a phenomenon, with the franchise marked as a must-have for any mobile platform.

"The app store is a real reason for Shazam's success," said Rich Riley, CEO of the music-recognition app maker. "A lot of that is because the app store makes it so easy to find it, download it, and update it."

Pandora, the second most downloaded free app on the App Store behind Facebook, credits Apple for greatly changing the trajectory of the company. For three years before the App Store, Pandora was confined to the desktop and was "a shadow of the bigger vision," said Chief Technology Officer Tom Conrad. From day one of the App Store, Conrad said, the company realized this is the way Pandora is meant to be consumed.

The App Store's success spawned imitators, some successful (Google Play), while others quietly faded away (Palm and WebOS). Windows Phone has its Marketplace, while BlackBerry has its App World.

Competition heats up
Apple has long touted the number of apps available to its iOS devices, but it can no longer claim the title of largest app store. Google Play boasts 975,000 apps, edging out the App Store. It too has seen more than 50 billion app downloads.

It's no surprise the Google Play has exploded, thanks to the aggressive adoption and promotion of Google's Android platform, which was widely embraced by the carriers that didn't have exclusive deals to sell the iPhone. In the U.S., while AT&T dominated smartphone sales with the iPhone, Verizon Wireless, T-Mobile, and Sprint rallied behind Android and Google Play's predecessor, the Android Marketplace.

Android is the top smartphone operating system in the world, far outstripping Apple's iOS, according to market data.

Android's runaway expansion and its open-ended adaptability for multiple smartphone makers come at a price. The fragmented nature of the platform can make it more complicated and costly to build for, which is one reason most apps launch on App Store first with Android to follow.

IDC analyst Hilwa noted where Android apps must span multiple versions of the platform, Apple apps have one; where the number of Android apps shops is in the triple digits, App Store is Apple's only game in town. That's why Apple customers spend the most on content and apps, he said

Help for the little guy
But with the number of apps in App Store's inventory approaching a billion, that leaves a giant swath fighting for -- and seldom winning -- the spotlight.

Derek Lamberton's apps, and those like his, "just get sort of lost underneath the pile," he said. The independent app creator's company Blue Crow Media specializes in city guide apps. His best-selling one is London's Best Coffee, which is consistently in the top 10 for the food and drink category.

"All my apps at this stage will hit the top ten when they launch, but unless there is a serious social media effort...it's really really hard to get new users," he said.

Even with top-tier exposure, the halo effect is brief. The New York Times twice highlighted a Lamberton's Craft Beer New York app, and it would give him a big spike in sales the day immediately following. But after the one-off jump to 250 or so downloads, the norm of five to 10 a day quickly returned.

"I see it again and again, developers don't want to release their download numbers because I think because they're ashamed," he said. "Outside of super games, there isn't a lot of money to be made."

"I see it again and again, developers don't want to release their download numbers because I think because they're ashamed,"
--Derek Lamberton, independent app developer

The future
Lamberton's challenges show how Apple can be a victim of its own success as it embarks on its next five years of App Store.

As big as App Store has become, the "wander the aisles" method of app discovery doesn't work anymore, Pandora's Conrad said. "Looking forward, the big opportunities in the App Store are to move beyond this merchandised, best-seller based browsing model" to search relevance.

Last year, Apple purchased app search and discovery company Chomp only to quietly close it down within months. On its own, Chomp was an alternate search website for Apple's App Store and, later, Google's Android platform, that retrieved results based on app function, not name. Despite the takeover stoking expectations of app discovery improvement to come, Apple never integrated Chomp's search tools in the App Store.

App Store on iPad

(Credit: Apple)

The upshot is users have a hard time finding the exact app they're looking for. And unless they're blessed with a name like Facebook or a big marketing warchest, developers struggle to find their audience.

While Apple wouldn't provide anyone to talk for this story, Apple iTunes chief Eddy Cue said at WWDC last month that Apple is working on making app discovery better. The company has added a feature that finds apps based on age range so parents can find apps for kids, and it has launched Apps Near Me, which finds most popular apps in a smartphone's location.

But even that improvement relies on the same thing Apple always has for app discovery: popularity.

Gartner's Blau, noting that Apple hasn't done much to help the apps in its universe that are hobbled simply by obscurity, said the change will have to come from within.

"This is something only Apple can fix."

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