Key figures: Steve Jobs (Apple co-founder and chief executive), Scott Forstall (head of iPhone software)
Summary
On July 10, 2008, Apple opened the App Store, a digital distribution platform that let owners of the iPhone and iPod Touch browse, purchase, and install third-party software directly onto their devices. The store became available through a free iTunes 7.7 update and as a built-in application on devices running iPhone OS 2.0, the major software release that shipped alongside it. The iPhone 3G — Apple’s second-generation handset, the first sold outside the United States in quantity — went on sale the following day, July 11, with the App Store preinstalled.
The store launched with roughly 500 applications, of which about 125 were free; the remainder were priced by their developers, many at 99 cents. The platform was the commercial counterpart to the iPhone Software Development Kit (SDK), which Apple had released on March 6, 2008, after Steve Jobs announced it the previous October. Under the terms set with the SDK, developers set their own prices and retained 70 percent of sales revenue, with Apple keeping the remaining 30 percent and handling payment, hosting, and distribution. The arrangement gave independent programmers a global storefront they could reach without negotiating with carriers or retailers.
Uptake was immediate. Apple reported more than 10 million application downloads in the store’s first weekend, across roughly 800 available titles. By September 2008 the catalogue had grown to about 3,000 applications and cumulative downloads had passed 100 million; the one-billionth download came on April 23, 2009. The rapid growth occurred despite Jobs’s initial reluctance — at the iPhone’s 2007 introduction he had favored web-based applications running in the Safari browser and resisted opening the device to native third-party code.
Significance
The App Store established the model of a curated, centralized marketplace for mobile software and is widely regarded as the moment the smartphone became a general-purpose computing platform rather than a fixed-function phone. By bundling discovery, payment, and distribution into a single channel and taking a fixed 30 percent commission, it created a new software economy — the “app economy” — that lowered the barrier to entry for individual developers while concentrating control over distribution in the platform owner. The format was quickly emulated, most directly by the Android Market (later Google Play), which opened in October 2008, and the model spread to tablets, televisions, and desktop operating systems. The store’s gatekeeping role and its commission rate later became the central issues in antitrust scrutiny and litigation over mobile platforms. Within a little over a decade the App Store hosted millions of applications and intermediated hundreds of billions of dollars in commerce, making its 2008 debut one of the most consequential developments in the history of personal computing.