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Apple prepares to reset the bar in the mobile app market

Apple’s plan to allow developers to add in-app payments to applications sold through its iPhone App Store could be the next game-changing step the company takes as it charges ahead in the mobile market.

Apple announced the new feature at the iPhone OS 3.0 preview event in March. And next week at the Worldwide Developers Conference in San Francisco the company is expected to announce the release dates for the software upgrade.

While in-app commerce is only one of several new enhancements to Apple’s iPhone operating system, it may be the most significant. The reason is very simple. By allowing transactions to be completed within applications, Apple is changing the economics of the mobile application market and providing developers more opportunity to make money from their applications.

And if executed well, Apple could leave its smartphone competitors in the dust.

“My sense is that this will lead to Apple increasing their lead in the market even more,” said Bart Decrem, CEO of Tapulous, a small developer that creates applications exclusively for the iPhone. “It will be a tremendous challenge for Apple’s competitors that are trying to build their own application stores to get traction with developers, because we’re in no rush to work on other platforms.”

There’s no question that the App Store has been a huge success. Apple announced its billionth application download only nine months after the store launched. But for developers the financial rewards have been mixed. There have been some paid applications that have sold well and generated hundreds of thousands of dollars in revenue, but most developers have barely broken even.

Today most of the applications downloaded from the App Store are free. And of the ones that are actually sold, the majority sell for 99 cents a pop.

“The challenge is that it’s hard to sell stuff for more than a dollar,” Decrem said. “And it’s really hard to make a lot of money that way, especially when the majority of the downloads from the App Store are offered for free.”

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This entry was posted on Saturday, June 6th, 2009 at 1:14 am and is filed under Apple News, iPhone App Reviews, iPhone News & Updates. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

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