Apple App Store Has Lost $450 Million To Piracy
If the headline is a true statement, then Apple needs to get off it’s backside and work out a way to protect applications from being pirated.
Via: 24/7 Wall St.
Apple and the companies that sell software for the iPhone and iPod touch at the App Store have lost over $450 million to piracy since the store opened in July 2008 according to an analysis by 24/7 Wall St. There have been over 3 billion applications downloaded since the App program began. Bernstein analyst, Toni Sacconaghi, estimated that between 13% and 21% of those downloads are from paid applications. According to this analysis, the average price of an application purchased at the App Store is $3. Sacconaghi estimated that Apple’s revenue from the App Store is between $60 million and $110 million per quarter. That amount has certainly increased since this research report was published because of the rapid growth of the number of applications.
If what that article is saying is true, then it’s clearly up to Apple to solve the problem. If for no other reason than to save the $135,000,000 that Apple is losing per 18 months.
There are folks out there that question the $450 million number and I must say that I have to wonder a bit too. The only way people can pirate iPhone/iPod touch apps is to jailbreak their iDevice. There are those that are doing this. In fact, some say that 10% of the iDevices out there are jailbroken. That comes to about 7.5 million jailbroken devices. Now, are we saying that, on average, each jailbreaker pirates $60 of software every 18 months? That sounds like a doable number. However, I really doubt that every jailbreaker is also a pirate. Now, what percentage of jailbreakers are pirates needs to be figured out.
The article states that 40% pirate, so now we are talking about 3 million jailbroken pirates would need to be stealing $150 worth of apps per 18 months. This still sounds like a doable figure. I mean we are talking less than 1 $0.99 app per month per jailbroken iPhone/iPod touch pirate. Assuming all the numbers are close to accurate.
If this is all true, then Apple is loosing way too much money to be sitting back and letting it happen. They must be working on something. If Microsoft can put together a system to prevent Xbox 360 pirating, then Apple can sure do something.
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This, as all these estimates always do, assumes that those who pirated the program would’ve purchased it otherwise. That’s an incorrect assumption. Not every “stolen” app equates to a lost sale.
Also, yeah, somebody is pulling numbers out of their ass.
Here’s an article on TechDirt painting this “analysis” in a different light.
http://techdirt.com/articles/20100113/1434217734.shtml
I don’t know. Looking at all the comments of that post…
Anyway, sure, maybe the 24/7 Wall St. site is full of BS, but the concept of lost sales is not. There are developers for the AppStore that are seriously loosing money because of lost sales. Losing because they spent many dollars to develop a program that is being pirated.
No matter whether the facts are correct or not, Apple still needs to get off it’s backside and put together some sort of protection to attempt to prevent piracy. EOS.
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There is no solution to piracy. If it could be eradicated, it would’ve been by now. From the iPhone perspective, the only way Apple can prevent it is to release the “perfect” OS, one that has no known/unknown flaws and therefore cannot be hacked, cracked, broken, etc. That’s not going to happen.
Most indie developers that I follow consider piracy a risk of doing business. They don’t like it, but they also realize they can either spend months or years making their software more unbreakable or they can put that same energy into making their product better and more attractive/beneficial for their users (while at the same time attracting more paying customers).
I think it’s stupid that people want to pirate an app, $0.99, $4.99 or otherwise. But I don’t think places such as 24/7 Wall Street help by releasing ludicrous reports touting unprovable numbers which rely on the ridiculous premise that every pirated app equates to a lost sale. It’s unbelievable to the point that many people are inclined to think the problem simply isn’t that bad, otherwise there’d be no reason for such exaggeration.
I’m not saying that piracy can be completely eliminated by Apple. However, it can be slowed. Microsoft has done that with the Xbox and Apple can do it too.
Whether the numbers quoted by 24/7 Wall St. are factual or not (the numbers they quote are not all that outrageous. However, if they don’t have a way of backing up the numbers with facts…), there is a problem with piracy on the iPhone/iPod touch. Right now it’s way too easy to do. If something could be done to make pirating difficult to do, that would be a huge leap forward.
Plus, if this iSlate thing is really going to happen, Apple is definitely going to need something to protect developers. That platform will attract larger developers like Adobe and the CS products. There is a huge potential for all kinds of powerful software that will cost way more than a dollar. Piracy will be much more desirable on such a platform.