70/30: Apple's Magic Moneymaking Machine

Folks who just watched the Apple event will note something strange: Jobs announced OS X Lion, saying it would arrive in the Summer of 2011. But, he said, he wanted us to have a little gift. It’s called the Apple App Store for laptops and desktops and it’s how lots of people – especially Apple – will start printing money.

Back in the old days, if you wanted to sell an Apple app you had to make a really good app, make a really good website, and have John Gruber or Merlin Mann link to it. You waited, hoped people bought the app, and iterated the applications over and over, giving updates out for free. It was a hit-or-miss affair. This is how software sales had always worked, even under Windows and even under most phone OSes – until the iPhone App Store.

Suddenly you had a quasi-curated, easy-to-use, one-click system for downloading applications. It worked really well. This was great for phones. So why not add it to OS X?

And it was done. Generally I think this is a good thing. Plenty of people have gotten rent money from iPhone applications and selling Scrivener or QuicKeys through the App Store will ensure discovery.

But what it also does is allow users to press a button and get a receipt. It’s the seamless iTunes experience that people love about the app store. And it also gives Apple a cut of the pie. That’s huge.

I’m also worried that this means arbitrary app rejections but I doubt this will happen on the desktop. As long as you can drag and drop a new app into the Applications folder, there’s no way Apple will try to scare away potential vendors. Given that programming for OS X is essentially free, Apple needs to offer lots of incentive to use their service.

To sum up, the App store is a great move for programmers and it’s an especially good move for Apple. Depending on how cynical you are, you can say Apple is expanding the potential audience of app buyers or locking down devs in an arduous financial deal. Either way, Apple makes money.