The Trillion-Dollar App Economy

15 years ago, on July 10, 2008, Apple launched the App Store, marking one of the most important milestones in the history of the iPhone and arguably of the smartphone era. Prior to the App Store’s arrival, the iPhone may have been groundbreaking in terms of its design and user interface, but it was nowhere near as capable as it would later become. Unleashing the creativity of third-party developers was arguably the key to unlocking the iPhone’s full potential.

While Steve Jobs was reportedly initially against third-party apps on the iPhone, Apple quickly came around the idea, and by early 2009, the company had fully embraced the app economy as an integral part of the iPhone experience. “There’s an app for that” even became the slogan of a famous iPhone commercial. Over the past 15 years, apps have fundamentally changed the way we communicate, play games, date, listen to music and do countless other things, all while creating a huge opportunity for independent developers around the world.

According to a study commissioned by Apple, users have downloaded apps more than 370 billion times in the past 15 years, while developers have earned more than $320 billion on the App Store since its launch. Taking into account all the things that people buy, book or order via apps these days, the App Store economy is even larger than that, though. According to the Analysis Group, Apple’s App Store facilitated more than $1.1 trillion in billings and sales last year, more than doubling from 2019, when the total was estimated at $519 billion.

As the following chart shows, the lion’s share of that total comes from the sales of physical goods and services within iOS apps, which accounted for 81 percent of total sales and billings facilitated by the App Store last year. General retail was by far the largest segment within that category, as more and more consumers shop on their mobile devices and brands and retailers can no longer afford not to have their own apps.

Considering the key role that third-party apps played in the iPhone’s success, it’s no surprise that Apple has already released a developers kit for its new Reality Pro headset. With the device not launching until sometime next year, Apple is clearly counting on the creativity of app developers to come up with clever ways of utilizing the headset’s capabilities.