In this piece, Fred Jacobs looks at how Apple is once again flipping industry norms and rewriting the rules, this time through the staggering revenue generated by their App Store.
Long-time readers of this blog have no doubt seen me refer to Pareto’s Principle on many occasions. Better known as the “The 80:20 Rule,” it states how 20% of a population – diarykeepers, salespeople, you name it – generate approximately 80% of results. From my perspective this is usually ratings and sales. If you look at your own station’s performance, this old rule of the road holds up quite well.
But now Apple – of course – is rewriting the rules, as they’ve been doing the last several decades. And not surprisingly, it’s their now-famous App Store that is causing analysts to stop and rethink the “givens.”
There are north of 2 million apps in Apple’s store (even more in the Google Play Store). So, if success was measured by the sheer quantity of apps produced these past dozen years, Apple’s a flat-out winner in the mobile space.
But as Apple learned early on, there’s a ton of revenue locked into their app store. And once the stubborn Steve Jobs was convinced it was good business to accept outside developers’ work in his store, the rest is history.
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Apple makes a ton of money on its famous iPhones, now selling the 12th iteration of its iconic smartphone. The markup on these handsets is astronomic. And while other brands claim to have out-innovated iPhone over the years, Apple continues to set the curve for smartphone share among the masses.
But what about revenue from the App Store? Last year, Apple raked in $61 billion from their apps – or better put, our apps. That’s revenue reported by the Analysis Group. In fact, the bigger number is $519 billion – the total billings Apple collected from their App Store ecosystem worldwide. Data: Analysis Group / Image: Apple And now a new analysis by Sensor Tower reveals a revised ratio that might make Vilfredo Pareto’s head spin:
The 25:65 Rule
And it looks like this:
Actually, it’s very simple – the Apple iOS system only has a 25-share of the handsets (and tablets). About one in four smartphones out there are iPhones. But that share of devices accounts for nearly two-thirds of revenue from the app ecosphere. Let that one sink in.
It’s not that Google is slacking. Their Android operating system dominates, but the money it generates lags well behind Apple.
Think of it as the same conversion relationship we talk about in radio ratings – how a station converts its cume (or reach) into time spent listening (or engagement).We often talk about the interrelationship between content and distribution. Both matter dearly to any successful media or tech company or platform.But Apple’s 25:65 Rule underscores the point that while distribution – all those […]