App developers receive $12 for each iOS device sold

One of the more interesting numbers reported by Tim Cook during the last earnings conference call was the total payment to developers during the fourth quarter. This is the first time that Apple reported a quarterly payout to developers.

The figure was $700 million and it was mentioned in reference to the total payments to date of $4 billion. The $700 million is interesting at least because it gives an idea of what Apple obtained in total sales of Apps. As it retains 30% and pays 70% to developers then it follows that it retained $300 million and the total “gross” sales was $1 billion in Q4.[1]

The $700 million is interesting for another reason. The $1 billion in gross income can be tested against another set of data. As the countdown has already started, sometime in February Apple will report 25 billion total apps downloaded. The last such milestone was October 4th when it reported 18 billion downloads. Assuming that they will cross 25 billion by February 25th, then we can obtain an estimate for the download rate per day: about 48.6 million apps/day.

That is a figure we can plot historically:

I plotted it in relation to the songs download rates obtained through a similar method. Although we don’t have an update on total songs downloaded, the rate is unlikely to have accelerated as much as apps did. The following charts also shows the reported total downloads by media:

Normalizing to the same starting date, the two media ramps are shown below:

But back to the figure of $700 million paid to developers and the implied $1 billion in gross revenues. Taking that figure and dividing it by duration of the quarter yields a figure of $310 million per month gross app revenues. The 25 billion downloads to date paired with the $4 billion in payments to developers gives us an approximate revenue per download of 23c. Computing the monthly revenue from the 48.6 million/month rate we get about $316 million per month. Pretty close to the $301/mo that the quarterly payout implies. This therefore also confirms the 23c per download (it looks a bit high but not by much.)

So the $700 million payout and the $4 billion payout to date and the 25 billion downloads all fit together as consistent pieces of a puzzle that give insight into the iTunes economy.

  1. Apple reported nearly $7 billion in iTunes stores revenue (though the apps were only counted for the 30% agency fee.) during 2011.
  2. If gross revenues were measured, the iTunes economy was about $10 billion in 2011.
  3. Payments to content publishers were in the vicinity of $7 billion of which $2.1bn was paid to developers.
  4. Operating costs for iTunes were therefore approximately $3 billion/yr.

One other interesting result: Since iOS devices started shipping, there have been over 335 million units sold. As 25 billion apps have been downloaded into them then about 75 apps were downloaded for each unit sold. Since we know the average price (23c) and the payout ratio (70%) then all this boils down to the fact that each iOS device generates $17 of iTunes income from Apps alone. That also means that each iOS device sold results in a minimum payment of $12 to iOS developers.

I’ve noted that Apple should be valued as a recurring payment from a satisfied customer base. A contributor made a comment that summarized it well: the payment schedule is approximately $1/day per computing unit (device or computer or tablet).

Now it becomes clear that Apple should also be seen as a recurring ecosystem payment system. Given a 24 month lifecycle, the amount is approximately $0.5 per device per month.

In other words, if you are an iOS developer you should note iOS device sales and use the rule of thumb that each one sold creates fifty cents of monthly income for you and your peers to share.



  1. Apple reported its iTunes income (as the anachronistic “Music” line item in its Income Statement) as $2.027 billion in Q4.It would be tempting then to think that Apple got $1 billion from apps and $1 billion from songs and videos and iBooks. This is not the case however.

    Apple does not report all its app income (what I call gross income). Under the “agency” model of retail sales it reports only the part it retains, keeping the 70% paid to developers off its books. Therefore, of the $2 billion in iTunes income, only $300 million were actually booked from apps. That therefore implies that Apple’s “everything-but-apps” iTunes revenue was $1.7 billion.

    Note however that the non-app income is mostly gross income and the payouts on that income will be significant (as much as 90% depending on many factors).

  • Luis Masanti

    Wonderfull job, Horace! You are the CSI of earning conferences!

    On the other hand, I read somewhere that Google is getting/expec to get around $10- per device/year from advertisement on Android devices.

    This is very close to $12- a year for Apple from apps, although –as Apple devices use to have a longer life– the “environment” could be greater over time.

    • Poisonkitchen

      I’ve actually seen the figure as approx $10 per Android device over its lifetime.

    • Dick Applebaum

      I recall reading somewhere that the bulk of Googles mobile advertising revenue comes from iOS devices.

      • Steven Noyes

        That figure came from Google during congressional hearings. Over 2/3 of Google’s mobile revenue comes from iOS.

      • Anonymous

        That’s certainly a humorous situation: iOS making money for Google and Android making money for Microsoft.

    • Steven Noyes

      Best analysis I have seen to date is at $0.11/device/month. It is a bit dated but the concept is still valid and was based on actual mobile device usage published by Google. TAC really kills revenue for Google.

    • Walt French

      Let’s remember that these are the paid downloads. No mention of whatever ad revenues iOS apps generate; I don’t recall seeing anything formal about the mix but we know it’s not $0.000 per app.

  • Anonymous

    “Assuming that they will cross 25 billion by February 25th, then we can obtain an estimate for the download rate per day: about 48.6 million apps/day.”

    Horace, did you know Apple have posted a clock showing Apps downloads?

    You can check your estimate of 48.6 million apps/day against the clock.

    • watchdog

      Horace’s estimate was pretty close.  From 4pm Eastern time Friday until 4 pm Saturday, the counter increased by 50m. I happened to do a check on both days as I wanted to get a rough estimate of how many apps were being “sold” daily.

      • Anonymous

        Well done watchdog. Very observant.

        You earned your name “watchdog”   LOL

        Do you have the number at 4 pm Easter Friday, so we can all monitor download rate?

        By the way it really is amazing to see the downloads ticking away so quickly!

  • sabernar

    It would be interesting to break down the app sales so we can see what indie (i.e., Plain Old Developers) are making.  Without the big mega-game companies, what are we ‘little people’ making on average?

  • Alex Perez

    Hello, I am a student studying Social Media Theory and Practice with @Dr4ward @NewhouseSU I recently subscribed to this blog and I think the fact that App makes have an incentive to create these programs is a good sign that Social Media as a whole is solidifying its play as a new, legitimate, form of media. #NewhouseSM4

    • Walter Milliken

      I would be careful about attributing apps as “social media” — some of them certainly are, but a lot of them are individual user tools or games. And while some of the games have a social component, I’m not sure if this is actually the commonly-used case, since most of them are casual-use, a-few-minutes-at-a-time games where it’s hard to work in a real-time social component. The social component is more likely to surface in GameCenter, with leaderboards and the like, I suspect. I’m not sure how much attention the average iOS user pays to GameCenter, and the social component there is pretty thin.

  • Infilytics

    Great analysis Horace, here is another similar one that looks at this data through a different set of lenses.

    • Horace Dediu

      I would be careful using iTunes revenues as a measure of software attach. 70% of app sales are not reported as revenues. See footnote in post.

  • Anonymous

    “I’ve noted that Apple should be valued as a recurring payment from a satisfied customer base.”

    If your referring to Apple’s stock valuation, I completely agree with you. However, I am not holding my breath expecting money managers to validate the above argument. They need something more straight forward and obvious, a subscription. (iCloud will help with that respect.)

    I have been following these numbers as well, and I fear they can be used as a potential disadvantage, eventually, as HTML 5 matures, to highlight what revenue Apple can potentially lose. The App Store may have developed a large enough user base so accustom to, and trusting of, that a perceived HTML 5 threat to this revenue maybe unjustified. But, time will tell.

    • jawbroken

      Even if HTML5 applications get the general capabilities and access to hardware features of native apps, as well as the easy payment options of app stores, why would they be successful where other cross-platform development efforts have failed? Java desktop applications never took off despite years of effort. Mobile devices and laptops seem to have somewhat diminished the advantage of logging into a web app from any public computer.

    • Anonymous

      I understand that with HTML5 developers save on Apple’s 30% cut (minus the costs of running their apps server-side, of course), but as a dumb user, why should I choose an HTML5 app over a native app? There’s nothing in it for me.

    • Walter Milliken

      For web-hosted apps, I expect the some of the same issues will limit them as happened twice before (with centralized timesharing systems and thin-client computing) — primarily the lack of control by the user over the reliable functioning of the app, due to both communications and performance problems. Web apps make a lot of sense for shared web services, but a lot less sense for personal devices.

      As an alternate authoring platform for on-device apps, there’s not really much advantage to HTML5 over other authoring schemes, except maybe for media-rich content like books.

    • iOSst

      I don’t that selling HTML5 apps on iOS will work in the near future 

  • OurielOhayon


    i think some data has to be recalculated. it is likely that many of those downloads are attributed to bots/fake download engines (unless apple has removed them from their counts). A top 25 app requires 50/80k downloads per day. You can quickly realize we re talking big numbers

  • iphoneblog

    “Since iOS devices started shipping, there have been over 335 million units sold.”

    Apple reported in january 315 Million cumulative iOS device sales. 335 Million is therefor an estimation, right?

  • Anonymous

    Horace, as the app downloads are tied to iTunes accounts and not devices it would seem plausible that people new to the platform download more than those who are upgrading devices, the reasoning being that the upgraders already have downloaded many of the “must have” apps. Have you tried to plot the data of upgrades vs. new customers vs. app download rate? Does it seem plausible to you that the value of customers would decrease somewhat over time?

  • Anonymous

    iTunes has been pigeon-holed as a break-even business designed to drive hardware sales.  I bet it will over time grow to be a substantial profit leg of the company 

    Apple is earning meaningful percentages of very large industries (e.g. newspapers, magazines, TV shows, books, movies, games).  The growth rate of iOS content consumption are just off the charts.  We’re talking another ~ billion+ iOS devices over the next five years.  Each consuming some premium content, Apple getting a piece of all of it. 

    • Anonymous

      You’re right red oak.

      With this amazing rate of growth Apps is going to grow into another huge Apple business.If Apps was a start-up it would be considered incredibly successful and command a huge PE premium in an IPO

    • Anonymous

      Not so sure about apps as major revenue source. If the average price per app and 80:20 split between free and paid apps I’m not sure where the extra margin will appear. If the average spend rises significantly due to high value content like magazine subscriptions, it might be a money spinner but otherwise it seems it will be close to break even for a while.

  • Walt French

    I don’t remember how many times I’ve (re-) downloaded the NYT app. Surely, a large fraction of downloads must be due to upgrades, making the per-download revenues much smaller even for paid apps. With ad revenues also missing, it must be very difficult to assess the actual developer revenues.

    • Steven Noyes

      Redownloads and updates do not count.

      • Walt French

        Thanks, Steven. How do you parse this out from the information? I’m apparently a step or two removed from an authoritative source.

      • Anonymous

        Apple has stated that the download counts do not include redownloads or upgrades, though I can’t remember the actual source now. But it is an official statement from Apple.

      • desreveR

        I asked this very question about a year ago. Horace told me that redownloads and updates are not included.

      • Horace Dediu

        Steve Jobs made the statement at the Apple Special Event in September 2009, four minutes into the video (available for download on iTunes.)

    • Horace Dediu

      Download totals do not include upgrades.

      – See you at Asymconf (

    • Kizedek

      I don’t think this is really an issue anyway. It might be an issue if it were a question of a developer trying to make a decision about whether to develop for iOS based on misleading information. Misleading could involve the impression that there is a certain download rate and therefore the developer can guage his addressable market; only to find out that download rate was vastly overstated.

      At first glance maybe we feel like we have to investigate what Apple is actually telling us, just as we suspect other companies of using numbers that reflect shipping units into the channel rather just giving us actual sales figues. However, since Apple is so far ahead, I doubt they would find the need to talk up 25 billion if it was only 15 or 20. Surely, 20 billion is just as good a number to get excited about and make a 10,000 dollar promotion around?But, IF the figure did include upgrades then wouldn’t that be all the better? The revenue would actually be generated by fewer downloads. At the end of the day, Apple has said it has paid out X-amount to developers. That doesn’t change, however many downloads represent upgrades or free apps (another thing that might distort the picture even more than including upgrades).What we can bank on, however, is the value in the paltform and devices itself, and this is in the title of Horace’s post. Whether or not the average iOS user represents 10 or 20 downloads, his device is still accounting for 12 dollars for developers. And as Horace says, you would think Wall Street would appreciate this as pretty reliable value beyond the sale of the device itself.

  • GJG

    What has never been clear to me however is if the non-Apple software distributors on AppStore effectively pay Apple’s distribution costs for its electronically distributed software.

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