Apple's CEO lays out a case for why his company's mobile platform is the one where they'll reach the most users and make the most money.
Erica OggFormer Staff writer, CNET News
Erica Ogg is a CNET News reporter who covers Apple, HP, Dell, and other PC makers, as well as the consumer electronics industry. She's also one of the hosts of CNET News' Daily Podcast. In her non-work life, she's a history geek, a loyal Dodgers fan, and a mac-and-cheese connoisseur.
SAN FRANCISCO--Facing growing competition from Google Android and an amassing army of appealing smartphones, Steve Jobs played defense Monday.
At Apple's Worldwide Developers Conference where Jobs introduced the iPhone 4, he also spent a good amount of time selling his already popular platform to his audience of developers. More so than at past iPhone developer events, Jobs was careful to spend time talking about how the App Store approval process works, how much money there is to be made from iAds, his device's market share and reach, and the potential for growth that they have by placing their creations in the App Store.
Why? It could be that he's feeling the heat. The App Store is a huge success and a model for the industry but has also gotten some flack lately with the growing perception of iOS as a "closed" system because of Apple's strict control of what kind of apps are allowed and the recent Adobe Flash flap. Apple's desire to control its platform has drawn the sometimes-public frustration of developers. Plus, Google has been making a casefor why its free, open-source Android OS is a viable option for mobile app creators.
Jobs threw a lot of numbers out there, mostly to remind developers that even though other smartphone makers are catching up to and even surpassing the iPhone in some ways, that it's the App Store's reach and size make for a bandwagon that's worth riding for a long time.
iOS by the numbers
Jobs started off by illustrating the App Store's reach, through iOS devices including the iPad, iPhone, and iPod Touch. Later this month, Jobs said Apple expects to pass a major milestone for its mobile platform.
"We will sell our 100 millionth iOS device," he said. That includes iPhones, iPod Touches, and iPads. And in case the developers in the audience weren't clear on what he meant, he underscored that point: "There is definitely a market for your applications."
That's pretty obvious already, what with 8,500 iPad apps after two months on sale, plus 250,000 iPhone apps. He emphasized the giant lead his platform has over competitors when he revealed that there have been 5 billion apps downloaded total from the App Store.
Jobs also addressed iPhone market share (No. 2 after RIM with 28 percent) and mobile browser market share: the iPhone is No. 1 with 58.2 percent. "That's 2.5 times as much as Android's 12.7 percent. This may help you put things in perspective," he said, to some laughs. He cited Nielsen data for both, which contradict some statistics that came out a few weeks ago that showed Android sales had surpassed iOS device sales during the first quarter of 2010.
Follow the money
While Jobs mentioned his competition, he wasn't nearly as overt as Google was at its developer conference two weeks ago when it took repeated jabs at Apple. Jobs was at least subtle in his few digs at Apple's chief frenemy, like when he quoted one of the developers behind the popular Elements iPad app. The app's creator apparently told Jobs that they earned more on the iPad app sales in one day than five years of Google ads on the product's Web site.
The money issue came up more than once, and Jobs clearly sees iAds, which debuts in July, as a major advantage his platform has over others.
Jobs said his "favorite statistic" about the App Store is related to what developers get out of putting their apps on his store: to date, he said, Apple has paid $1 billion to developers. Seventy percent of app sales goes to developers (the other 30 percent going to Apple).
He also played up his devices' reach into customers' wallets: "There are 150 million (credit card) accounts hooked up to the App Store, iTunes, and iBookstore. "That's the most of any store on the Web...So people are ready to buy your apps."
The iAd advantage
But direct sales to consumers are not the only way to make money for developers. Apple thinks it's come up with the easiest way to help even developers of free games make some kind of profit from their efforts. That's where iAds comes in. Though Jobs is always in marketing mode when he speaks to the press or the public, he was more obvious about it Monday, giving the devs in the audience the hard sell on his ads platform. More than once he said that it is Apple's goal "to help our developers earn money."
Jobs specifically highlighted the way iAds keep users from leaving an app if they click on a banner ad but instead stay within the app. He also stressed the ease of using iAds: Apple sells the ads, developers just need to place the ads in their apps, and they'll get 60 percent of what Apple takes in for the ads. He also listed the names of big-name brands they already have on board (Nissan, GE, Campbell's, Best Buy, Geico, and others), emphasizing, "These are high-end brands."
Together, iAds has $60 million worth of ad inventory already sold for the year. "Our goal," he said again, "is to help you earn money."
What wasn't said but was implied is that while Android may have a wide variety of formats for in-app ads, with iAd, Apple is going to make it easy as possible for developers. And with the reach of its platform, Apple will be able to bring in big-name advertisers who will pony up a lot of money.
One of Apple's main appeals to advertisers, content providers, and gadget shoppers has always been the premium experience it offers. It's been like that for the Mac, the iPhone, the iPod, and more recently, the iPad. Now that the iPhone has some competition, we'll see if developers too will continue to buy into that.