The birds might look angry. But Rovio and Apple are laughing all the way to the bank.
Although iPhone growth might be slowing, the popularity of the App Store certainly isn't. Apple announced it's closing in on 50 billion downloads. Along with a contest awarding a $10,000 gift card to whoever lands the milestone, Apple published a list of the all-time most popular apps. Rovio's Angry Birds dominated both the iPad and iPhone charts, appearing 4 times on each. And with the accelerating momentum of App Store growth, come new opportunities for Apple.
The crazy growth continues. The 10 billionth app download occurred in January 2011 and it took nearly 14 months for the App Store to reach 25 billion. From a rate of just over a billion a month during that span, most of 2012 saw close to 50 percent higher as 35 billion was reached in October of last year.
Since then, though, things have gone into overdrive. Downloads are now happening at close to 2 1/2 billion per month. While some of that is a function of the 85 million iPhones and 43 million iPads sold in the past two quarters, it also suggests the average Apple device user is downloading more than ever. That helps explains why Apple users keep reporting in surveys the next device they are likely to buy is another one from Apple: They are locked in through their loyalty to a lot of apps.
Games dominate the charts. Of the all-time 25 most-popular paid apps for iPhone, 19 of them are games. (That's actually up from 17 when the list was compiled a year ago, according to the folks at macstories.net, whose work informs this post.) On iPad, only 15 of the paid top 25 are games. Among free apps, games are much less popular, accounting for about 1/3 of each list. While Rovio rules with Angry Birds and Bad Piggies, Zynga appears a couple of times thanks to Draw Something and Words with Friends. Interestingly, both are properties the company acquired rather that in-house products.
Social media remains ascendant. If there is really "Facebook fatigue," it's not showing up in the App Store numbers, as the social network's app is the all-time most popular freebie on iPhone. Beyond that, though, there were big moves in the popularity of other social apps. Instagram, which Facebook bought a year ago and which crossed 100 million users in February, is now the third most popular free app ever on iPhone when it was 19th a year ago.
While that gives Facebook the #1 and #3 slots, the very popular chat tool WhatsApp moves from 18th to 6th this year. That allowed it to move past Twitter, which nevertheless made a jump from 12th to 8th.
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YouTube is at 4th all-time on the iPhone list while Google Maps debuted in 25th place. YouTube is much less popular on iPad at 15th (suggesting the iPhone data there might be inaccurate as the app technically existed before when it was bundled) and Maps doesn't make that list, which shouldn't surprise anyone since many iPads never leave the living room. Altogether, Google captured 4 spots on the iPhone list thanks to the new offerings, with the Google Search app sitting in 10th place. Recently, that app got updated to support Google Now, a service that's fantastic on Android.
Google Now, when fully functional, is incredibly powerful. The iOS version so far is barely scratching the surface of what it can do. If Google can work around some limitations of what third-party apps are allowed to do on the iPhone, don't be surprised to see Google Search reach the top 5 next year.
The billions that really matter. For a long time, Apple tried to downplay the importance of downloads to its business. But no longer. On the recent quarter's conference call, CFO Peter Oppenheimer said, "We are now very happily paying our developers more than $1 billion every quarter." Given that Apple takes 30% of sales from apps, that puts the business conservatively at a $6 billion annual run rate. Of the $2 billion Apple itself is collecting, much of that drops directly to the bottom line after paying credit-card companies and some data-center costs.
One way to think about this is that the App Store alone is a larger business than Facebook, it's likely more profitable and it appears to be growing faster. Whether that's sustainable is harder to know given the limited information Apple provides about it. While drawing the comparison, though, it's worth noting that Facebook touted in its earnings report that a new advertising unit used to promote apps was very successful and popular with developers.
Apple, so far, has been hostile to app promotion, even removing products from the App Store that run afoul of its rules for doing this. But developers increasingly are willing to pay to get noticed among the roughly 800,000 apps out there. And with some care, Apple could profit from that willingness, as former Googler Hunter Walk has noted. Arguably, this is a billion-dollar opportunity with customer benefits if done right (and possibly an area for collaboration with Facebook).
Ironically, the late Steve Jobs didn't think developers needed a dedicated way to write software for iPhone when it was first released back in 2007. The reversal of that decision a year later unleashed nothing short of a revolution in both the technology and the way it's sold. It's less than 5 years later and 50 billion app downloads are days away. Those birds might not want to admit it, but they have a lot to smile about.
