How the iPhone App Store grows

March 18, 2009, 7:31 PM UTC

As part of its iPhone 3.0 presentation Tuesday, Apple (AAPL) offered some new statistics on how the iPhone App Store is growing — including its first update since Jan. 16 of the number of App Store downloads.

It also introduced some features that could change the nature of the store — and not necessarily for the better.

According to Greg Joswiak, VP of iPhone marketing, users have now downloaded more than 800 million applications from the store — a 60% increase in two months. He also said that the number of apps available for download has passed 25,000, but we have no reason to disbelieve 148Apps, which keeps a running total and puts the count as of mid-day Wednesday at 28,408.

The two data points give us a chance to update the fever charts we first ran two months ago (see here). As you can see from the slope of the two curves, downloads are growing steadily and the number of apps is still accelerating.

At this point, the developers writing for the App Store — drawn to an installed base of 30 million iPhones and iPod touches — may be Apple’s greatest competitive advantage over smartphones running Research in Motion’s (RIMM) BlackBerry OS, Microsoft’s (MSFT) Windows Mobile, Google’s (GOOG) Android, Nokia’s (NOK) Symbian or the new Palm (PALM) Pre OS, due out this summer.

Which may be why Apple gave the developers so much in the new SDK released on Tuesday. In addition to the sheer number of improvements — more than 1,000 new API (application programming interfaces) for them to play with — the developers were offered several modifications in the basic App Store business model that may be good for them but not necessarily good for Apple’s customers.

The one that’s getting the most attention is something Apple calls the “in-app transaction” — the ability to sell things to users within an application that has already been paid for. As Gizmodo’s Adam Frucci writes in a post entitled
Why iPhone In-App Transactions Could Be a Disaster
: “It’s great news if you’re a developer looking to make more scratch, but it’s potentially terrible news for users.”

“Basically, this is opening the flood gates for nickel-and-diming microtransactions from the App Store,” he writes. “Before, when you spent $5 on a game, you knew you were getting the whole game—with free upgrades. Now, you’ll spend $5 on a game and you’ll need to spend another $5 to unlock all the levels and weapons.” (link)

Two examples of in-app transactions demoed by the game company ngmoco:) at the special event Tuesday did nothing to reassure us. In the first, children setting up puppy play dates are invited to buy stuff for their pets (cute hats, shiny collars) at $0.99 a pop. In the second, a player pinned down in a bloody first-person shooter can tilt the odds his way — and blow an opponent to smithereens — with a $0.99 rocket launcher.

“The worst part of it,” writes Frucci, “is there will be enough people willing to pay a little here and a little there to support this kind of behavior. But I, for one, am out. Do not want.”