Apple Has a Genuine Green Shoot

Now this is a genuine green shoot. The Apple (AAPL) iPhone app store is an incredibly popular place... at least that's what the kids out there tell me. I'm not sure the revenue potential for $1.99 apps are equivalent to the birth of $3500 personal computers, but I suppose they are more profitable than many of the internet startups that never made a red cent a decade ago. Plus you have some big hits as seen at the end of this story. At least we have actual innovation happening in this space.

• There is a hint of that old boomtown feeling again in the Bay Area -- this time in living rooms and garages and cubicles where a cottage industry is unfolding around the iPhone app. Despite the recession, hundreds of start-ups have sprung up in the area since Apple Inc. launched the iPhone two years ago and opened up the device so third-party developers could create games and other software applications for it.
• Apple, which has sold more than 30 million iPhones and 20 million iPod touches, boasts more than 100,000 apps on its App Store, through which people can download games, entertainment and utility applications.
• Most are free -- and make money from ads -- or cost less than a dollar. Developers get 70% of any revenue they make from app sales, with the remaining 30% going to Apple. That is a better proposition than app development for other mobile phones has been in the past. Rivals now offer similar revenue-share models.
• As a result, many Silicon Valley techies have been lured to the iPhone app start-up scene. According to Mobclix Inc., which operates the iPhone's largest ad-exchange network -- a marketplace to connect advertisers and app developers -- 41% of its 4,000 app developers are in Northern California. The region with the second-largest number of app developers is New York-New Jersey, with 14%. (unfortunately, the boom seems quite concentrated)
• "A large concentration of people who are doing [iPhone apps] are Internet entrepreneurs...and a lot of Internet entrepreneurs are in the Valley," said Matt Murphy, who oversees the $100 million iFund, a venture-capital fund run by Kleiner Perkins Caufield & Byers that backs iPhone app developers.
• "This is our dot-com boom," said Samir Shah, 26 years old, a co-founder of Mountain View-based Snapture Labs LLC, which makes a $1.99 camera app that has been one of the top-ranked photography apps since September. Mr. Shah and two other Snapture co-founders graduated from Carnegie Mellon University in Pittsburgh in 2007 and moved to Silicon Valley shortly after. They work on their iPhone business in their free time from one of their apartments, but said they hope to eventually turn it into a full-time business.
• Silicon Valley's universities are also coaxing the iPhone app boom along. In September 2008, Stanford University began offering an iPhone app-building course taught by Apple's engineers. It also posts the course online free. Roughly 130 students have taken the course since last fall, and more than one million people have downloaded the lectures, said Julie Zelenski, a Stanford lecturer in computer science. (very cool)
• The popularity of the iPhone App Store had led its competitors to provide similar offerings. Research In Motion Ltd., Google Inc. and Palm Inc. have opened similar stores and have been trying to woo app developers with promises of better support. Though the costs of developing applications for all the devices are prohibitive to many of the smaller developers, some companies, like Flixster, a San Francisco-based movie sharing social network, have created apps for all of them.

One example of the remaining beauty of America, guy strikes out on his own, has bright idea for company, gets funded, gets bought out, goes to start the next company - in under a year!

• Some local techies are finding the iPhone app opportunity so attractive that they left jobs at more secure tech firms to jump into the scene. Sam Yam, 25, one of the founders of AdWhirl, a Palo Alto ad network company for iPhone apps, says he left a job at Mountain View service company Loopt Inc. in February to start the company, which helps manage ad placement in iPhone apps.
• Five months after creating AdWhirl Inc., it got $1 million in venture funding. Mr. Yam says the four-person company was profitable "even after paying fairly generous salaries."
• In late August, San Mateo-based mobile-advertising company AdMob Inc. agreed to acquire AdWhirl for an undisclosed sum. On Monday, Google Inc. announced its plans to acquire AdMob for $750 million. Mr. Yam is planning his next venture, which he says will have an iPhone component.

Bravo!

Disclosure:Author has no position in Apple, but is glad to see this.

Comments

[John Galt:]

Good story.
They create products Americans want
They create products foreigners want
They innovate
They are admired
Apply has tens of billions in cash
They create jobs inside their company
They create jobs outside their company that piggy back on them
They aren't led by a "game manager", but a "game changer" CEO
They are what American business should be...

PS. I still like the idea of buying iphones and selling them in Russia on the black market for 100% to 25% more than you buy them for here. If I could make a couple hundred bucks on average per iphone...

Nov 13 09:07 AM

[User 401295:]

this just summary of the story from wall street journal yesterday. no new insight.

Nov 13 09:19 AM

[Roger Knights:]

A beneficial side-effect of this ap development is that the programmers learn a subset of the OS & software tools used on the Mac, and do iPhone ap development on the Mac. This will make it easier for them to do development work for the Mac. Another beneficial effect is that it strengthens the Mac's incursion into the techno elite, who are trend-setters.

Nov 13 10:04 AM

[TraderMark:]

User,

Not everyone is an apple investor or reads the WSJ who reads this article. Was just making a point that some little hives of activity are actually out there and are positive... we need more.


On Nov 13 09:19 AM User 401295 wrote:

> this just summary of the story from wall street journal yesterday.
> no new insight.

Nov 13 10:16 AM

[jmmx:]

Build a better mouse trap and the world will beat a path to your door.

Here is an interesting item on iPhone usage:
www.apple.com/iphone/b.../

Nov 13 10:58 AM

[LongAAPL:]

In a nutshell, Apple has the world creating software for them, millions of App developers with the highest motivation.

On the other hand, Microsoft is laying off employees.

Guess who will create the best product.

Nov 13 11:06 AM

[brewer:]

No one has anything to compete with iTunes/AppStore, iPhone, iPod, or Mac.

Nov 13 11:48 AM

[LaChic:]

hehehehehehe, i worry when everyone is so positive on things....is like the alarm ringing, sell, sell, sell....

Nov 13 05:53 PM

[Advill:]

CHINA.CHINA.........AND MORE CHINA, The real test for Apple is CHINA, if they are not allowed to sell in a minimum of conditions (They are not allowed in wi-fi, perhaps some functions as GPS either etc...)

An Iphone should be an Iphone and not be a castrated product, this is a common problem with cellular operators they ask the suppliers to restrict functions because they don´t want them in Europe WI-FI restriction in phone sets provided by operator is very common, and Nokia and other easily accepts.

Apple has no problem (actually they sold and got paid 5 million units) problem is how Unicom will react having 5 million units chinese don´t want (assuming a cost of $300 per unit means 1.5 billion dollars) but the important point is Apple image in the most important market of XXI century.

Rgds

On Nov 13 09:07 AM John Galt wrote:

> Good story.
> They create products Americans want
> They create products foreigners want
> They innovate
> They are admired
> Apply has tens of billions in cash
> They create jobs inside their company
> They create jobs outside their company that piggy back on them<br/>They
> aren't led by a "game manager", but a "game changer" CEO
> They are what American business should be...
>
> PS. I still like the idea of buying iphones and selling them in Russia
> on the black market for 100% to 25% more than you buy them for here.
> If I could make a couple hundred bucks on average per iphone...

Nov 13 07:10 PM

[Shaftsinker:]

Yeah, people creating software for Windows is completely unheard of.


On Nov 13 11:06 AM LongAAPL wrote:

> In a nutshell, Apple has the world creating software for them, millions
> of App developers with the highest motivation.
>
> On the other hand, Microsoft is laying off employees.
>
> Guess who will create the best product.

Nov 14 08:55 AM

[Karldean:]

Windows open and close Apple's grow, am I missing something here?

Nov 14 10:54 AM

[Dialectical...:]

A verb maybe?

On Nov 14 10:54 AM Karldean wrote:

> Windows open and close Apple's grow, am I missing something here?

Nov 14 12:59 PM

[forge98:]

It is way more than the mouse trap. They have created a cult of cool. Many mousetrap makers, one Jobs.


On Nov 13 10:58 AM jmmx wrote:

> Build a better mouse trap and the world will beat a path to your
> door.
>
> Here is an interesting item on iPhone usage:
> www.apple.com/iphone/b.../

Nov 14 04:03 PM

[roger that:]

In reponse to a verb maybe: Some of the windows in my house don't open or close. My picture window is an example. But all of my Apple trees grow.

No further verbs are needed. There are three. A period or two might have helped. Don't pick apart someone's usage until you understand what they are trying to say. Otherwise, you will simply confuse people and make a fool of yourself.

Nov 15 09:12 AM

[Dialectical...:]

It was just a joke. But having said that I couldn't pick apart his usage because I honestly couldn't understand what he was trying to say. I thought he missed a word. I realized hours later that it was a punctuation problem. Among the problems was "Apple's grow" leading me to think this said "Apple is grow" which made me think there was a word or something missing. I don't like it when people play grammar police and I know I have had my share of typos. I wasn't trying to pick apart anything, but rather get him to clarify what he was saying. Still not sure I get what he was saying. I'll try to be less flippant in the future, but it was intended in a good natured way.


On Nov 15 09:12 AM roger that wrote:

> In reponse to a verb maybe: Some of the windows in my house don't
> open or close. My picture window is an example. But all of my Apple
> trees grow.
>
> No further verbs are needed. There are three. A period or two might
> have helped. Don't pick apart someone's usage until you understand
> what they are trying to say. Otherwise, you will simply confuse people
> and make a fool of yourself.

Nov 15 12:42 PM