Much has been said and written about the magic of the iPad, how it would be the savior of industries, and how it would transform and reshape the world.
Having an application, Weather HD (watch trailer), in the Top 10 top-paid list, we wanted to share our early look into how the numbers really are, and what the iPad App Store is shaping to become. We will use our own sales numbers to estimate how everyone else is faring out, and how much the iPad App Store is worth.
If you’d rather not go through the details, you can jump right into the summary.
We had Weather HD approved for sale on March 30. Some hour of the day on March 31, Apple made it possible for anyone to download iPad applications, even though the iPad was still not available for sale.
On April 1st, Weather HD became the number four top-selling iPad application, only after Apple’s own Pages, Numbers and Keynote, and on April 2nd, it continued to be the top-selling 3rd party iPad application. In those two days, we sold a little under 2,000 copies of Weather HD, at $0.99 a pop. Not too bad, considering the iPad wasn’t even out yet.
Sales of Weather HD stretched further with the release of the iPad, making about 3,500 units on the launch day. Our rank then relaxed for a few days, falling to the 20s, but then we raced back up till as high as the #3 spot.
This high-start, dive, and then jump, while surely affected our sales, gave us the ability to see how sales were at various spots in the App Store’s charts, and with a bit of maths, and by correlating Weather HD’s sales and ranks, to the ranks of other applications, and mixing in the numbers from Apple’s Top Grossing list, we were able to have a good estimate on basically how much money is flowing in the App Store!
Sales and Ranks
We will start by using our own sales and ranks data for Weather HD to draw the bigger picture. While we were the fourth (and a couple of hours the fifth) on the launch day, getting about 3500 downloads, ten days later when we became the third, we saw a little over 2,250 downloads. We attribute this variance to a launch fever, and we will thus not include in our analysis the first four days.
Shown to the right is our sales data for the second week after the iPad release. We will be using 10 data points from our sales. We found that we are lacking data points in the Top 100 that ranked lower than 30, and that ranked higher than 30 in the Top Grossing. To compensate for those points, we used points from each of the graphs to find points in the other. For example, we know how the graph looks like in the Top 30 Paid applications, so we can use this data to find the revenue of some of them, and then use this revenue along with their Top Grossing rank as new data points in the Top Grossing graph. For example, take April 15th:
It’s important to note that these numbers have been reached through first, there being 500,000 iPads in the market, and second, as we said earlier, that the launch might have had a positive uptick to the sales numbers of iPad applications. We tried to limit the latter by not including the first post-launch four days in the analysis. Curve fitting was used, and the error is about 10-15%.
The following is the estimated sales of the Top 100 Paid.
Here is the full list of estimated sales for the Top 100 Paid. These numbers only represent the App Store as it is right now, and will obviously change as the App Store grows. The error is about 10-15%.
Current Market Size
Based on the data we have calculated, we estimate the Top 100 Paid applications made on April 15, based on the day’s specific Top List, $304,058 in the United States alone, and of these, the Top 10 Paid applications represented 32% of the total sales of the 100.
The Top 100 were calculated by curve fitting, and by extending the graph, we estimate the Top 1,000 applications to have made $372,649 on April 15, thus the latter 900 applications above the Top 100 list are making about 23% of the total sales. The number of applications for the iPad is growing, but given the rate of sales in the 101-1000 ranks compared to the Top 100, we expect the later spots to be even lower and thus neglect them in our analysis.
Potential Market Size
At $372,649 per day, this maps to a market that is worth about $136 million per year, and that’s not accounting for growth in iPad sales. Furthermore, the above numbers are for US sales only, and if the iPad App Store were to be like the iPhone’s, then 40-60% of the sales are occurring internationally, so on average that figure could be become more than $272 million per year with the international launch.
The iPhone App Store saw a tremendous growth from mid-2008 to today. By September 2008, 100 million applications had been downloaded, and then 2 billion by September of the next year, and by April 8 of 2010, downloads shot past the 4 billion mark according to Apple. If the iPad were to enjoy a similarly lucrative growth, it’s fair to assume that within two years, hitting the 1 billion dollar mark, per year, will not only be plausible, but easily surpassable.
Corollary: Let’s Hope iPad App Prices Won’t Kill Us All
In an editorial at Engadget, Paul Miller suggested that the iPad’s application prices are too high, and “will kill us all”. While it’s undeniable that the prices are higher, the unit sales pushed daily are still far from the iPhone’s, and so for developers to be able to recoup their costs, higher prices seem only logical. Hopefully, as the iPad sales rise, hesitant developers will feel more inclined to lower their prices to be at a better position to compete.
Based on the sales and ranks of our very own Weather HD, we estimate that the Top 1,000 iPad paid applications are making about $372,000 per day, which sums up to about $136 million per year. This figure is based on there being only 500,000 iPads in the market, and is accounting only for the application sales in the United States. If the iPad App Store were to be like the iPhone’s, then 40-60% of the sales would occur internationally, so on average that figure would rise to become $272 million per year.
We believe this to be a conservative estimate. If the iPad were to enjoy a lucrative growth as the iPhone’s, which rose from 100 million downloaded applications in the first 2 months to 4 billion 19 months after, we can easily see the iPad’s App Store becoming a $1 billion per year market in 2 years.
This is quite remarkable. While Apple has re-invented how music is sold and played, and then went again to re-invent the mobile industry, the iPad is an entirely new market. Two weeks ago Apple did not just introduce a new type of computer, they put the seeds of a new market that is bound to make many developers and publishers… happier.
Special thanks got to Applyzer, the iPhone and iPad analytics company, for providing us with the Top 100 Paid and Grossing lists of the iPad App Store for the past two weeks.