Apple's App Store turns 5: How did we get here?

50bn apps & $10bn paid out to developers - the store that can make or break whole companies

Apple CEO Tim Cook unveiling the latest iPad in 2012 (Getty Images)

Apple's App Store celebrated it's 5th birthday yesterday, and has proved itself a revolutionary force. But with 50 billion apps downloaded and more than $10bn paid out to developers the question is, how did we get here?

2008 - A revolution in the making

The app store first went live on July 10 with around 500 apps ready to download. It took only two months for that figure to grow to 3,000 and by September of the same year the store had reached 100 million global downloads.

As with most of Apple’s success stories, the App Store wasn’t the first of its kind – it just straight away became the best of its kind. The user interface had yet to hit the heights of intuition achieved today, but it was Apple’s simplification of the actual download experience was what mattered.

Although many wrongly credit the App Store as kicking off the beginning of the end for physical media (because Apple were definitely responsible for the global spread of faster and more reliable internet connections), there’s no doubt that they normalised the process.

2009 - Making money, by hook or by crook

As well as introducing the general public to the concept of the digital-only shop, the App Store has also been instrumental in pushing new methods of monetization for developers. Although 2008’s undisputed hit in terms of ‘imaginative’ pricing was undoubtedly the infamous ‘I Am Rich’ app ($999.99 for a glowing gem that did absolutely nothing and still sold 8 copies), Apple’s introduction of in-app purchases (IAP) in 2009 was a quiet revolution.

Developers had originally started pricing apps at $9.99 but now anything at that price (or even half that) tends to be aimed at a very professional audience. The latest research from app analytics firm Distimo has showed that IAP software generates 76% of the App Store’s revenue as of February 2013.

2009 was also the year that Apple first showed their teeth with regards to content. Even before the store had launched Steve Jobs had voiced his concerns that the opening the platform to third-party developers would damage the iPhone’s integrity and reputation. However, this need for control was also a need for monopoly – and in ’09 Apple banned Google Voice apps for “duplicating features that the iPhone comes with”. The boundaries between what’s Apple’s to control and what third-party developers can offer are contentious to this day.

2010 - The 'app economy' arrives

The bad vibes over Google Voice’s banning carried over into the next year, with a Wall Street Journal investigation showing that many apps had been transmitting users’ personal info to advertising companies without their permission. These sorts of allegations have never really died down, and it seems fair to say that as well as in-app purchases, Apple have also added a new revenue stream for developers in the shape of data-harvesting.

But this isn’t to say that your average consumer is ever seriously deterred by the thought of unwarranted snooping, and in June 2010 Steve Jobs announced that Apple had generated more than $1bn in revenue to developers since the store’s launch two years ago. Since June of this year this figure is now over $10bn – and its numbers like this that allows the Financial Times to hail Apple’s creation of an “app economy”.

2010 also saw the publication of the App Store Review guidelines – feeding further discontent over Apple’s approval policies. The guidelines were meant to streamline this process but just revealed the company’s narrow-mindedness:

“If you want to criticize a religion, write a book. If you want to describe sex, write a book or a song, or create a medical app […] We will reject Apps for any content or behavior that we believe is over the line. What line, you ask? Well, as a Supreme Court Justice once said, 'I'll know it when I see it'."

Of course, without these guidelines it’s probable that the App Store wouldn’t have developed its reputation for quality and accessibility, but still, for a company that liked to hit customers over the head with its mantra of ‘Think Different’ Apple have always known how to keep people in check.

2011 - There's no mobile without apps

By now apps had become immovably entrenched in modern culture: in January 2011 'app' was made the ‘Word of the Year’ by the American Dialect Society; Apple approved its 500,000 entry into the store; and there was continued innovation in pricing with new options introduced for developers to charge subscriptions.

It was off the back of these successes that Steve Jobs began to really push the idea of the 'post-PC' market, a concept long fought over by Jobs and Bill Gates but that centered on a decentralisation of your digital life heavily backed by Jobs with his introduction of iCloud in 2011.

iCloud may have so far turned out to be a bit of a bust but the App Store's success can be seen as a counterbalance. Mobile devices live and breath in the cloud, and without Apple's network of applications that expanded far beyond the borders of mere casual gaming we would never have made the transition to tablets and other post-PC platforms.

2012 and beyond - New levels of revenue but new challenges as well

Although Angry Birds and their creators Rovio are often held up as the epitome of an app success story, 2012 and the launch of just two games from Finnish developers Supercell proved that the boundaries of success had moved on once more.

Glowing coverage from the likes of Forbes praised the company for its incredible revenues - with those two titles from 2012 (Hay Day and Clash of Clans) now generating more than $2.4 million every day from 8.5 million players worldwide. Analysts predict that Supercell might reach a revenue of $1bn by the end of this year, which would make it twice the size of EA's mobile games division - a publisher with more than 900 apps in the iOS store.

The App Store's popularity and reach has made such success stories possible - but with such a massive audience ready packaged, failures can be equally devastating. Apple themselves proved this in 2012 with their launch of their own maps app. The product was such an abysmal failure that CEO Tim Cook was forced to issue an extensive apology:

"With the launch of our new Maps last week, we fell short on this commitment. We are extremely sorry for the frustration this has caused our customers and we are doing everything we can to make Maps better."

When a store's popularity is such that it can cripple its own owners and demand that their competitors are reinstated you know that you've created a phenomenon. Five years of the App Store have seen a lot of changes - who knows where we'll be in another five.