Apple's biggest innovation for 2008? The iPhone App Store

I know 2008 is far from over and we have many more Apple products to look forward to. It just seems to me that Apple has already profoundly changed the technology landscape again, and people are starting to realize it. In a few years time when we are drawing up the yearly Apple timeline, 2008 will be known for one thing...

This time, the game changer isn't some shiny, sleek hardware or innovative new ways of making an operating system hum, it is the way that Apple's third-party developer environment has been set up. The iPhone App store simply makes the old way of distributing software seem primitive.

Apple learned from their market-leading iTunes Music and Video Store that they could distribute music over the Internet and sell lots of devices. Apple publicly claims to only be trying to break even in their store endeavors and in turn sell more music and video devices... but surely they wouldn't thumb their nose at a bit of profit. Apple could have also seen what was happening in the Sidekick realm. The App Store borrows heavily from the Danger/Sidekick ecosystem.

Also, Apple had mild success selling click-wheel iPod applications like PacMan through iTunes.

The biggest inspiration probably came from the Installer.app and Cydia "Stores" that developed on Jailbroken iPhones. These environments sprung up as a means to distribute hacked applications and after only a year were modern distribution platforms. Apple did well to take their inspiration.

They've hit all of the points. Apple takes a reasonable but substantial cut of the developer money...but they offer quite a bit in exchange. They build the developer environment and continue adding updates to the SDK. They also market the applications through the iTunes stores and their website. They take care of the credit card transactions and payment processing. They even host the files for downloading.

By most indications it is a huge success. Apple announced that 10 million App (probably mostly free) were downloaded on the first weekend alone. Popular free App like Facebook and Tap Tap revolution have already surpassed one million downloads each.

Big developers from many other platforms have been lining up to build applications. Oracle has an application. Salesforce is on the iPhone. SAP is on the way. Microsoft is even said to be working on iPhone applications.

The big difference, however, with this model is that small developers can build successful applications without a large company to back them up. One such developer, Eliza Block, who I met at the wine bar below my apartment, has been extremely successful with her crossword puzzle application called 2across. I watched as she frantically got it ready for the App store opening and subsequently climbed the charts. Much to her surprise, she is currently making around $2000/day. The App store has allowed her to make a career out of programming for the iPhone. There are many more like her.

Though the store seems wildly successful, some recent events have taken the luster off of the store. Apple has removed some popular applications without releasing information on why. One application creates a Wifi tether for your laptop to jump on the 3G network. Additionally, Apple removed a $1000 application called "I am rich" which was basically just an image of a diamond. Obviously a trick/publicity stunt. Also, the App store security has been compromised, leading some to wonder if pirated App will become available for distribution on jailbroken iPhones.

These little hiccups aside, Apple looks to have moved up the value chain in software distribution and revoltionized the software industry. The model will be hard, if not impossible, for its competitors to copy....perhaps that's why Microsft purchased Danger earlier this year for $500 Million...it certainly wasn't for the Java-based Sidekick OS.

Do you think Apple will try to bring this software distribution to the Macintosh? ...There is always 2009.

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