A Second Opinion on Palm Pre's App Numbers

By Devin Coldewey

The Pre is emerging as a polarizing device, even more so than the G1 (which everyone agreed was kind of beta), probably because it’s the closest thing to a legitimate threat that the iPhone has faced. Who wouldn’t get defensive? With strong sales in its first two weeks and an entirely new OS for developers to do their thing with, it’s strong out of the gate but controlled — because the jockey is holding the reins tight. Palm (PALM) didn’t expect a dynamite launch or a million app sales in a week; what they’ve got so far is, if we can believe what they say, pretty much what they’d hoped for.

Of course, the TechCrunch network is a treasure trove (a rat’s nest, some would say) of opinions, and we have been known to attack the Pre (savagely and repeatedly) despite our interest in it. The app sales numbers for the Pre need more context than a direct comparison to the iPhone App Store, but that is an important data point, so let’s do it thoroughly.

The Palm Pre launched strongly with at least 50,000 sales in its first weekend, and as many as 100,000. If we assume a steady pickup rate (supported by the unchanging slope of the Medialet downloads chart), we’re probably looking at almost the rumored maximum of 150,000 units sold. It’s a liberal estimate, but let’s just use it.

Now let’s look at the iPhone’s sales. On March 6, when the App Store was announced, there were over 5,500,000 iPhones out there, and by the time the App Store launched in June, I’m estimating there were an additional 2,000,000 sold at the very least.

So the user base of the App Store was ~7,500,000 phones when it launched. The launch user base of the Palm store was zero — same as the Android Marketplace, which is doing just fine, thank you. This isn’t a throwaway statistic, it’s the main problem with the comparison. An established user base approaching 10 million people and growing the way a hit year-old phone should is more than a slight advantage, it’s a game-changer. So let’s get proportionate.

By the end of the month, the iPhone App Store had 60 million downloads from 7-8 million users; by the end of this month, Pre users will have downloaded around a million apps, from a total user base of less than 150,000. I really don’t think that’s quite so bad as it’s been made out to be. If you look at the number of apps downloaded per phone, you get about 6 or 7 per Pre and about 7 or 8 per iPhone.

One might even say (if one were so inclined) that considering the number of apps available and the number actually downloaded for both, the Pre is doing better. I’m not saying it, but I am saying that one could say it if one wanted to.

The limitations on the Palm App Catalog are significant — but limiting who has access to the SDK is both a design and a business decision that Palm was prepared for. The number of apps will grow, and the quality will be high because of the bar Palm is setting. The “real” App Catalog will be launching in a few months, so there’s that to look forward to as well. Of course, it’ll open up the App Catalog to the kind of trash apps that make up the majority of the App Store and Android Marketplace, but that’s what people are demanding.

If I’m honest, what we’re really looking at here is a bunch of fantasy numbers, Photoshop math, and estimated statistics that can be interpreted in several different ways. But not all of us are looking for ways to show the Pre is failing; a contentious issue like this needs to be looked at from both sides. How do you see it?

Original post

Comments

[Yagottabe K...:]

The Medialet graph unambiguously shows a dropoff in applications downloaded for the Pre. If Pre sales were steady-state and the number of applications s increasing then the curve of that graph should be bending UPWARD, not DOWNWARD as it very obviously is.

We know one fact - the number of applications has dramatically increased.

We then can EASILY and WITHOUT AMBIGUITY determine that the number of Pres being sold MUST have dropped off and CONTINUES to drop off...quite likely MORE dramatically as the number of applications has increased.

Jun 21 11:37 AM

[Mark Horner:]

I think the problem with this analysis is that the iPhone app store was from a standing start. Before this, there was no easy way to download apps to phones, and apple had to market the concept of an app store, as well as the concept of an app store for the iPhone.

Now everyone knows about the app store as a concept, so Palm only have to market the concept of an app store for the pre, to an audience hungry for apps.

Jun 21 01:42 PM

[jmmx:]

@ Mark Horner

An interesting thought there, and well argued, but I do have to disagree a bit.

The iPhone started with its own built in apps. Immediately there was clamoring for independent apps. It took Apple several months to release the app store, so in this time, the concept of the apps was very well accepted (also there existed a market for apps for WinMobile and RIMM and Symbian).

What Apple's App Store did was revolutionize the "storefront" by making it inclusive (i.e. ALL apps came through it) and EASY EASY EASY. By adding it on to the iTunes store they made it trivial for uses to order and install since most were already using iTunes anyway.

Still, I think there is a certain amount of reason in what you say: Once the trail has been cut, it is easier for others to follow. This is as much true in the hardware as it is in the apps store.

Jun 21 03:08 PM

[Network Effect:]

You may be right, for the small customer base that the Pre has, they may be downloading a lot. Who cares in my opinion. The reality is that Apple does have the largest mobile ecosystem and it is now growing itself. The self-perpetuating cycle between buyers and sellers is now in place with the iPhone/Pod/Touch/App Store and it cannot be beaten by anyone except Apple itself. The only thing that will tear this down is poor execution on Apple's part ... and we all know where Apple stands on execution. Unfortunately for a lot of companies and industries, this snowball is going to continue to roll down hill and no one can stop it. Even if Palm or RIMM or anyone for that matter comes out with better technology, it wont matter. The value lies in the ecosystem, and you can't build one when there is already a dominant player in the market. Someone might be able to carve out a niche in a vertical market if they beat Apple to the punch. This is the strategy all these other phones should be going after - build out a mini-ecosystem in as many small vertical segments as they can before Apple gets there.

Jun 21 03:58 PM

[SharonW:]

"So the user base of the App Store was ~7,500,000 phones when it launched. The launch user base of the Palm store was zero — same as the Android Marketplace, which is doing just fine, thank you. This isn’t a throwaway statistic, it’s the main problem with the comparison. An established user base approaching 10 million people and growing the way a hit year-old phone should is more than a slight advantage, it’s a game-changer. So let’s get proportionate." - Devin

Devin, I whole heartedly agree with your premise and would go further to say that Tech Crunch isn't merely biased or savage, but just plain FAULTY in its comparison. Yours would be the proper comparison.

Tech Crunch's comparison would be like comparing the number of calls made on land lines the year prior to the release of cell phones and the number of cell phone calls made in the first month of their release. It's just stupidly and blatantly wrong.

Moreover, Tech Crunch fails to take into account that Palm while still holding on to the SDK for another two months has said "Beginning immediately, we’ll accelerate the growth of the early access program, expanding as quickly as resources allow. Over the next few weeks, the program will grow from hundreds to thousands of developers."

All statistics will change rapidly when those thousands of developers are able to release their apps to the Pre even before the rest of the developer world is granted access to the SDK.

Thanks for a proper perspective. I've grown tired of witless, biased comparisons of apples to oran...palms.

BTW, I stopped by my local Sprint store on Friday, during a down pour. The store was packed. They are getting new shipments of Pres daily, but there is still a waiting list of 70 names which is being added to as well as subtracted from daily as the shipments come in.

Last, but not least, let me remind some here of the some 35,000 odd apps out there for previous Palm products that can still be used on the Pre with the emulator. Apple did not invent the app concept.

Jun 21 04:42 PM

[SharonW:]

Palm doesn't have to "beat" Apple to be succesful. There is plenty of market share available for the three major competitors in the smart phone market. The losers will be those phone makers that have not created top-quality, smoothly-operating smart phones at affordable, subsized prices.

The game is really the growth of the smart phone market share in the universe of all cell phones.


On Jun 21 03:58 PM Network Effect wrote:

> You may be right, for the small customer base that the Pre has, they
> may be downloading a lot. Who cares in my opinion. The reality is
> that Apple does have the largest mobile ecosystem and it is now growing
> itself. The self-perpetuating cycle between buyers and sellers is
> now in place with the iPhone/Pod/Touch/App Store and it cannot be
> beaten by anyone except Apple itself. The only thing that will tear
> this down is poor execution on Apple's part ... and we all know where
> Apple stands on execution. Unfortunately for a lot of companies and
> industries, this snowball is going to continue to roll down hill
> and no one can stop it. Even if Palm or RIMM or anyone for that matter
> comes out with better technology, it wont matter. The value lies
> in the ecosystem, and you can't build one when there is already a
> dominant player in the market. Someone might be able to carve out
> a niche in a vertical market if they beat Apple to the punch. This
> is the strategy all these other phones should be going after - build
> out a mini-ecosystem in as many small vertical segments as they can
> before Apple gets there.

Jun 21 05:02 PM

[mollytjm:]

was anyone at an Apple Store friday, saturday and sunday? i was...King of Prussia Mall, PA and there were LINES and the store was packed. Product was flying off the shelves, and not just iPhones either...iTouch and also i saw a lot of computer buys. People coming out of the store were already downloading apps and talking to others about it. The excitement was palpable. There's never this experience at any other store.
i know that Sprint didn't have constant lines for 3 days...and wouldn't have, even if the Pre had been available all the time.
The real point is that EVERYONE is playing catch up to Apple, from the first iPod sold! Well, from the first Mac, actually, but it wasn't very noticeable for awhile.
Apple is the best at fast, good innovation. There is room for other products, obviously, and no one product is perfect for everyone. But to suggest that anyone will overtake Apple in innovation is ignoring the obivous. They just know how to do it and they know how to sell it.
Long APPL

Jun 22 10:01 AM