Sunday, March 30, 2008

Vital Signs: Apple's 1301 web apps and over 100,000 SDK downloads

How strong are Apple's (AAPL) corporate vital signs? Based on the two metrics in this headline their getting stronger!

As I've mentioned here before, I've expanded my definition of corporate vital signs beyond traditional lagging financial measures to include leading indicators of competitiveness and innovation. As investors appreciate when they estimate growth of future cash flows, there are no financial measures on balance sheets and income statements to reflect a company's reach and access to talent beyond its four walls. Traditional financial measures can't reflect the value of having a global developer community building software for your hardware device. A new set of corporate vital signs is required.

Let's take a look at Apple's newest innovation, the Apple iPhone and iPod touch. While much more than merely interesting, their success could have been limited by the ability of Apple's limited in-house resources to develop new and exciting applications. But with the recent launch of the new SDK, Apple has poured the foundation for an entirely new innovation platform. No longer does Apple need to rely on in-house developers to create native applications.

Without the SDK, the developer community can already make web apps available to run on the devices. These applications are being displayed by Apple at As of March 30, 2008 there were 1301 web apps listed in the Apple webapps website.

This is interesting but not where the real value of Apple's innovation lies. What's more interesting is the upcoming June '08 launch of Apple's store for native iPhone applications. Development of these native applications is made simpler through the iPhone Software Development Kit (SDK) and Apple claims 100,000 downloads of the SDK in the first 4 days since its launch:

“Developer reaction to the iPhone SDK has been incredible with more than 100,000 downloads in the first four days,” said Philip Schiller, Apple’s senior vice president of Worldwide Product Marketing. “Also, over one million people have watched the launch video on, further demonstrating the incredible interest developers have in creating applications for the iPhone.”

Apple also previewed the new App Store, a breakthrough way for developers to wirelessly deliver their applications to every iPhone and iPod touch user. Developers set the price for their applications—including free—and retain 70 percent of all sales revenues.

Leading developers such as AOL, Electronic Arts, Epocrates, and Sega have already demonstrated amazing applications using the SDK, and developer response continues to be phenomenal with more developers embracing the platform.

As Apple takes in 30 percent of all applications sales, a new leading measure of Apple's cash flow will certainly be the "number of 3rd party applications" and "the price of the application"

The fun doesn't stop there. Apple pretty much guaranteed strong interest in the platform by bringing the famed KPCB venture capitalists to the table. At the launch of the SDK, KPCB announced that they have created a $100 million iFund to invest in companies that are able to bring new applications to the platform:
"A revolutionary new platform is a rare and prized opportunity for entrepreneurs, and that's exactly what Apple has created with iPhone and iPod touch," said John Doerr, Partner at Kleiner Perkins Caufield & Byers. "We think several significant new companies will emerge as this new platform evolves, and the iFund will empower them to realize their full potential."

And Steve Jobs proudly declared:
"Developers are already bursting with ideas for the iPhone and iPod touch, and now they have the chance to turn those ideas into great companies with the help of world-class venture capitalists," said Steve Jobs, Apple's CEO. "We can't wait to start working with Kleiner Perkins and the companies they fund through this new initiative."
Finally, not content to remain a consumer device, Apple announced that they are building Enterprise-grade connectivity into the next generation of the device to be available in June '08.

Just imagine this...the iPhone is now on the verge of a development boom. This development, spurred on by a $100 million venture fund, will deliver a whole new suite of mobile applications for the consumer as well as the enterprise. By opening up the development platform, Apple has significantly strengthened its competitive position and set itself in motion to become the leading provider of handheld entertainment and productivity devices for some time to come.

P.S. Apple is most certainly borrowing a page from and its platform. has been a pioneer in allowing developers to build and sell applications that will run on's platform. More on that in another post.