Inside the App Economy: Making Money from Mobile Phone Apps

Beyond the goofy games is a world of useful programs that’s making fortunes and changing the rules of businessIt’s easy to shrug off the kooky world of apps. The bite-size software programs people load onto their mobile phones or tap into on the Web seem mostly to be silly games and pointless novelties. But look past the beer-drinking apps and flatulence programs and you’ll see something significant taking shape: a bustling app economy that’s creating new fortunes for entrepreneurs and changing the way business gets done.It’s happening with dizzying speed. Just two years ago, almost none of this existed. Apple’s App Store, the most popular destination for mobile-phone programs, was launched last summer. Now there are more than a dozen rival stores, and at least 100,000 apps have been created. Some startups that staked their claim in the app economy have become large, lucrative businesses in just a few months. Two-year-old Zynga, which makes popular game apps, is already profitable, with more than $100 million in revenues. By comparison, Google didn’t start making money until its third year — and still had less revenue.To read this report in BusinessWeek in full, see: see:Striking It Rich: Is There An App For That?
Seeking fortune and fame, entrepreneurs rushed to create programs for Apple’s App Store. That’s not always what they found.Steve Demeter seems like the perfect poster boy for Apple. Two years ago, the 30-year-old computer programmer became one of the first people to sell his product — a puzzle game called Trism — through Apple’s App Store, a virtual marketplace where third-party software developers connect with customers wanting downloads for their iPhones. He pulled in $250,000 in just two months and quit his job writing code for ATMs. Demeter’s success caught the eye of Apple’s public-relations team, which profiled him in an inspirational video at and gave him a shout out at its June 2009 World Wide Developers’ Conference (WWDC). Media hailed the San Francisco resident an “App Store Millionaire” who would never have to work again — a happy financial reality that Demeter confirms. “Nine-to-five is no longer a concept for me,” he tells NEWSWEEK.Only that’s not because of Apple.Demeter’s new-found wealth — he won’t specify the exact amount in case people bombard him for loans — comes from investing his earnings in Apple’s archrival Palm. “I bought Palm’s stock for $1.76 and sold it for $12,” he says. “It’s kind of ironic.”

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