The App Store turns five: A look back and forward

By Lex Friedman (July 8, 2013)

Five years ago, the App Store was born. A million apps, billions of dollars, and an uncountably high number of Angry Birds later, the store is unquestionably a smashing, unrivaled success. These days, customers download more than 800 apps every single second.

When the iPhone launched in 2007, Steve Jobs famously told developers that they could write apps for the device by creating Web apps. Developers mostly scoffed at that pronouncementsome went so far as to jailbreak their phones just so they could play around with creating software for the revolutionary new device.

Respite came in March 2008, when Apple laid out the roadmap for iOS developmentincluding a software development kit (SDK) for programmers to write their own appsand announced that it would provide a storefront through which developers could sell their software.

The App Store launched on July 10, 2008, with a whopping 552 apps on its virtual shelves; the most common prices were $1 and $10, and there were a mere 135 free apps.

In the intervening years, the App Store has made some developers fabulously wealthy; gave some a new, stable career; and left others with broken dreams and disappointments. But owners of iOS devices didnt focus on the App Store lotterythey simply cheered the many awesome new abilities their devices gained.

This is the story of the App Stores success; it's a success that has come in the face of plenty of issues with the store, many of which persist even to today. But more on that in a bit.

Not so humble beginnings

Among those 552 launch apps were many that still grace our home screens: MLB.com At Bat, Facebook, Yelp, Shazam, and Super Monkey Ball, to name a few. The App Store launched simultaneously in 62 countries; then, as now, it was accessible from a devoted iOS app, or as a feature sort of crammed into iTunes.

The App Stores first weekend saw more than 10 million app downloads. Less than a month later, Segas Super Monkey Ball hit 300,000 downloads, netting Sega $3 million and Apple more than $1 million of its own, thanks to the stores 70/30 revenue split.

By September, the store had surpassed 100 million downloads, and when the end of 2008 rolled around, the most downloaded app of the year, with 5 million downloads, was Facebook. Of course, since that particular app was (and remains) free of charge, those downloads didnt translate directly into dollars for Facebook or Apple. But as the App Stores fortunes rose, so too did the iPhones, and later the iPads. And Facebooks mobile usage went through the roof.

Read this extract from a 2013 Macworld article about the Apple App Store to answer: Part A: Does the App Store provice a two-sided platform? If yes, are there same side and cross side network effects? Please explain. (30 pts) Part B: Does the App Store operate in a market that exhibits "winner take all" dynamics? (10 pts)