Apple App Store Loses 450 Million in Revenue

Since the launch of the App Store in July 2008, over 3 billion apps, both free and paid, have been downloaded.  While that  number seems high, and it is, only a mere 13-21% of these  downloads are from purchased applications (Toni  Sacconaghi).  Despite  these percentages, Apple still brings in  about $110 million per quarter from sales at the App store.  Yes,  the App Store and iTunes in general has been enormously successful since its launch, but beneath the prosperous facade lies a slowly dying retail center that I’d imagine looking something like a dingy thrift store, where things can be easily stolen and the robber gets away with it.

If you have been on the internet in the past 4 years, then you would be well aware of the widely available pirated media littering the web.  Whether you’re a savvy media collector attempting to download every song ever or just a thrifty teenager with an empty piggy bank, everybody has downloaded a piece of pirated content from a media giant such as Ninjavideo or LimeWire.  Such discounted, actually, free, content is obviously more appealing than paying iTunes $1.29 for one two-minute song.  All this cyber black market talk raises the question: What is to become of iTunes and the App Store???

Well, getting back to my original points, as of recent, developers such as NASDAQ have “reported alarming piracy rates for their software, . . . and the ease with which users may obtain pirated versions of paid applications for free is only increasing,” (24/7 Wall Street) thus robbing the App Store of hundreds of thousands of sales!  Since the App Store’s launch in 2008, analysts have estimated Apple and its developers together have lost about 450 million dollars to piracy.  So, to answer the question about the future of iTunes and its App store, it is safe to say that iTunes and the App store may see a decline in sales with years to come, but will ultimately remain a strong leader in the business.  As for Apple, they choose to ignore the current increase of pirated applications and will stay focused on the tens of billions of dollars generated by its sales in hardware.

What do you think?  Leave a comment!

By Andrew

Senior Editor of the Real Mac, San Jose, CA.

6 replies on “Apple App Store Loses 450 Million in Revenue”

software makers have to assume that if people can get something for free, they will. the mass market consumer doesn’t feel like electronic piracy is unethical. you see it with music, movies, and now apps. if you’re in the business to make money through application development, spend a little extra time and develop licensing restrictions that protect you from piracy. if you don’t, then you’re just asking for trouble.

Exactly: App developers need to make their copyrights more secure and develop licensing restrictions, like you said. Therefore, it is not Apple’s fault they have lost so much money to piracy, but rather developers. But as for Apple, they need to figure out how to block out jail-breaking which will help further prevent the use of pirated and third-party Apps.

All companies blame piracy if they are losing sales while they fail to understand pirates are the ones who actually buy things. To crack an application what do you have to do first? Buy it. Most people dont have a clue on how to get cracked apps for the iPhone or even on computer. The Music Industry has blamed piracy on the lack of CD sales, but they fail to see that no one buys CDs and we getting closer to an age where more things are going to be free. Bands have released albums on torrent trackers and have been hugely successful gaining more money then those who put their music on iTunes.

Apple could care less if their apps get pirated, they know the numbers are so small it wont affect them, people still have to buy the actually app to crack it. Plus Apple does not care about jailbreaking their only concern is unlocking.

I Will have to come back again when my course load lets up – nonetheless I am taking your RSS feed so I can read your site offline. Thanks.

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