VG Five

Gavin Bowman has posted the first App Store Roundtable summary on the topic of "The Gold Rush." You can find it over at The Apple Blog.

I recently joined the Rountable and look forward to contributing to it. I think it's an excellent idea and a way to spur discussion between devs.

I'm sure by now that most independent developers on the iPhone have realized a basic fact: Unless you're insanely lucky or well connected, the "Gold Rush" is much like its San Francisco cousin, circa 1849. Most devs are not going to become overnight millionaires from their iPhone apps.

However, this does not mean that the independent developer should give up. Afterall, there are more than 30 million iPhone OS users out there. If 10 percent of them use the App store (surely a conservative estimate), that means 3 million people will potentially be exposed to your app. If one percent of those people buy your app, that's 30,000 sales. These aren't the kind of numbers we see most apps move, but anyone can see the logic in developing for the platform. With a good idea, a solid plan, enough time, and a bit of luck, anyone can see some generous income from iPhone development.

Now, in the real world, let's imagine that Joe the Dev has written his first iPhone application. Joe is 25 and works full-time at Mr. Finance, a job that pays him $30,000 a year. Joe doesn't mind his job, but sadly he never went to college and he's unable to find a better paying one. Seeing the amount of money that the media is showing some iPhone developers as making, Joe saves up some money and buys a refurbished Mac Mini along with some iPhone dev books and a $99 developer's account. Joe spends about $600 to get into iPhone development.

For a few weeks, Joe studies and codes and finishes his first iPhone app. It's not a game (Joe knows notihng about graphics), but "Joe's App" seems to Joe like something that people would be willing to purchase for $0.99. He sends it off to Apple and 20 days later (and after one rejection from Apple... Joe should have read the Human Interface Guidelines more carefully) it appears on the App Store. Having done his homework, Joe knows to update his release date to appear on the top of the Release List in his category.

Joe anxiously awaits his sales results. As he downloads and opens his first daily report, Joe is saddened to see that only 10 copies of his app sold. He's made a mere $7. As more days go by, his app drops down to no daily sales after selling 20 copies in the first week. Joe contemplates quitting iPhone development.

However, Joe stumbles upon some simple math:

If Joe spends a few hours a week to develop and keep updating a handful of apps (along with a little word of mouth), he stands a reasonable chance of selling an average of 10 copies combined between them all each day. If he can do that for a year, he'll bring in pre-tax (post-Apple) earnings of around US$2500. Not bad for someone with a full-time job to supplement their income. If Joe commits himself even more, he can raise that number by developing more apps and spreading the word about his projects.

Joe's story is the perfect example of what I call the penny rush. Much like any other market, not everyone is going to  be the big dog on the pile. There's plenty of room for a lot of smaller dogs to gnaw on the collective chew toy.