A Matter of Time

Apple announced it had sold more than 160 million iOS devices on January 18th, during their Q1 2011 earnings call. Let’s assume they sold another 15 million devices from that time until March 11th, when Apple gave us some interesting numbers:

Over 200 million people have an Apple ID.

They’ve paid developers over $2 billion through the App Store.

There are more than 350,000 apps in the App Store.

All of those statistics are incredible. And using them, the 175 million iOS devices, and a little bit of math, we can draw some very interesting conclusions:

  • Customers have spent a total of $2,857,142,857.10 on apps.
  • Developers take in $5714.29 of revenue per app.
  • iOS device owners spend $16.33 on apps for each of their devices.

The first statistic is mind-blowing. The App Store launched in the summer of 2008 alongside the debut of the iPhone 3G. It’s been running for less than three years and yet apps are now a multibillion dollar industry. 

Although the second statistic isn’t as astounding as the first, it’s still incredible, especially considering the fact that it includes free apps, not just paid ones. Revenue per app would be way higher if we only included paid apps.

But let’s forget about those two statistics for a moment. Instead let’s focus on the last one – iOS device owners spend $16.33 on apps for each of their devices – right now. $16 isn’t really a lot of money. But to future iPhone owners who have already invested in the iOS platform, it seems like it, which is what really matters.

Six months ago Horace Dediu calculated that 37.7% of all iOS devices sold are iPod touches. For arguments sake, let’s assume that number is still true today. 

If you take that number and multiply it by 175 million iOS devices, Apple has sold 65.975 million iPod touches. Let’s assume 70% of them  – 46.1825 million – are bought for kids up to 13 years old. By the time those kids are older and are ready to get their first phones, two extremely important things will have happened:

  1. The price of data plans – currently the limiting factor of smartphone adoption – will have dropped dramatically.
  2. Those same kids will have spent even more money on iOS apps than they already have.

And both of those factors will encourage iPhone adoption.

If a kid has already invested what feels to him like a fortune on iOS apps and he’s picking out his first smartphone, of course he’s going to get an iPhone. No one – especially a teenager – wants to carry a smartphone and an iPod touch if they don’t have to. The iPhone is a convergence device – that’s part of what makes it so incredible.

The iPod touch is one of the smartest things Apple has done in the last couple of years. Steve Jobs called it an “iPhone without the contract.” He’s certainly right, but it’s more than that. It’s most peoples’ first experience with iOS. It’s a precursor to the iPhone.

And it’s only a matter of time before they get the real thing.