lostsync

The Mac App Store is here and the tech world is abuzz with talk about what it means for OS X, Apple, and for the rest of us. It’s an interesting question, I suppose. The App Store on the iPhone changed the telecommunications industry forever and propelled the iPhone from “super awesome phone” status to “super awesome miniature computer” by allowing users to extend their devices in endlessly personalized combinations of ways. Having a look at someone’s iPhone is like getting a tiny peek inside of the person that it belongs to because the App Store has enabled a level of customization that had never been seen before and, despite Google and RIM’s best efforts, still hasn’t been matched.

It’s only natural to speculate about the importance that an extension of the App Store paradigm to the desktop could have, but while the iPhone’s App Store created an entire industry and revolutionized an existing one, it’s important to remember that these are very different sets of circumstances. Here are some of the key differences:

• When the iPhone App Store launched, most people did not have a smartphone or think that they needed one. Today, smartphones are some of the hottest items in tech.
• The Mac software market is alive and well. Distribution through traditional channels has been working fine for most OS X users.
• Windows computers already have robust, feature-rich applications. The App Store’s apps are mostly analogs of existing Windows applications.
• Many Windows users have significant investments in their software, in both time and money.
• Most people already own a capable Windows computer.

To me, this says that it’s pretty obvious that it’s not Apple’s hope to get a bunch of new users with this addition to their OS. What’s more likely is that, having seen what kind of revenue app sales from the iPhone brings in, they wanted to the same sort of post-sale monetization to the Mac. Let’s look at some numbers.

Apple recently said that they had crossed the 3 billion download mark in just under 18 months. Let’s say 25% of all app downloads are paid and the average price a user pays is $2.49. That comes to $1.87 billion in total app sales, with $560 million of it for Apple to keep. That’s over $31 million a month and just over a cool mil a day. That’s huge, considering they aren’t even selling their own software. These numbers are just estimates and could be much lower, but even so…it’s obviously a very significant source of revenue for Apple.

The Mac App Store is nowhere near as full as it’s iPhone counterpart. At launch, Apple boasted “over 1,000″ Mac apps. Compared to the iPhone App Store’s 327,000+ apps, that doesn’t really seem like a lot, even if it is by all measures a perfectly respectable software repository. Roughly 33% of the iPhone App Store’s apps are free offerings. I would estimate the Mac App Store to have more like 20-25% from my limited bit of poking around at it and I’d say the median price for an app is around $8, though that’s hard to judge.

Based on this, Apple stands to make an average of about $2.4 from each Mac app sale, assuming an even distribution among price points (which is a pretty bad assumption, but I’m not a mathematician). That’s almost equal to the total average cost of an iPhone app. Even if we bump it down a bit to account for cheaper apps being bought with higher frequency, at 2$ per sale, it’s nothing to scoff at, especially when considering that projections for Mac sales in 2011 are pretty optimistic. I didn’t have a lot of luck finding projections about Apple’s total projected Mac sales (all anyone cares about this year is the iPad), but Apple will likely sell 11-15 million MacBooks and MacBook Pros this year. Throw in another 5 million iMacs and you’ve got a nice installed base of around 20 million Macs that came with the App Store preinstalled by this time next year. Half of in-store buyers are first-timers, so that’s 10 million new Macs that belong to people with no experience with them whatsoever. If Apple successfully gets these people to buy an average of 5 paid apps each in their first year of ownership, and we completely discount people who have been with OS X for at least one prior machine and those who don’t buy a Mac this year but just continue to use an older one, that’s $30 million in post-sale revenue for Apple from Macs sold in 2011 for doing what essentially amounts to nothing. With Mac sales growing 37% year over year, those numbers are looking pretty awesome for Apple and that is why we have a Mac App Store.

That, and because if Microsoft did it first, it’d be tacky for Apple to follow suit and Jobs isn’t really that keen on tacky.

Having used the Mac App Store, I can’t really say I’m that crazy about the whole idea. The interface is fairly nice and all, sure, and finding things is easy…it’s not an issue of usability or practicality, but one of supporting developers. With the iPhone (which I don’t actually own, but I use Android and the same is more or less true), there’s only one official way to get a paid application onto the phone – buy it from the App Store. Without stealing the app outright, there’s no way to make sure Apple isn’t getting a cut of the money that you’ve decided that a developer deserves. That’s how they like it. With OS X, it’s a different story. I can go to Panic’s site and buy Transmit 4 for 35$ and know that they’re going to get every cent or I can buy it from Apple at the same price and know that they’re going to get a little over 20 bucks. I love Transmit – I want those guys to get all of my money. Apple didn’t make Transmit – they made OS X, which I bought. It’s Panic’s turn.

On the other hand, I do like the idea that if I swap in a new hard drive or buy a new machine, had I bought all of my apps from the App Store, they’d all just magically come back. My Android phone is rooted, so I flash updates that sometimes wipe my phone completely clean and these days, after you sign back in, all of your Market apps reappear within an hour or so…it’s a truly wonderful thing. Having just had my drive wiped by AppleCare, I can definitely say that I see the appeal there. No more lost serials, either…a lot less uncertainty about the software that you own in general. Apple’s got it; it’s cool. I just wish they weren’t trying to cut into all of these dev’s revenue streams with it. A huge majority of Mac software is from small indie dev shops and I want to support those guys just like I want to support home-grown restaurants and local artists. These are the people that are really working for what they get, that are really trying new things. Apple is a huge company and they really don’t need an extra $30 million all that badly. Ten years ago? Sure, but not today.

Given all of this as well as the general backseat the Mac has taken to the iOS device line, it really just feels like this is purely a monetization strategy and not one that really benefits developers or consumers all that much in the long run. Increasing sales by 30% isn’t that significant if your price per unit goes down by 30% at the same time. All that does is raise your support costs. For customers, it means that your developers are likely doing more to accomplish less. I don’t see anything like another gold rush here. I see an easy way for new Mac users to get software. People who are more akin to Mac ‘enthusiasts’ will likely continue to buy software in more traditional ways: from the people who made it.

That said, only time will tell…if there’s one thing Apple usually has, it’s a plan.