I’ve been asked a few times about whether or not I’ll create iPhone applications. I haven’t looked into it much, prefer desktop/laptop development, and generally feel that the iPhone “gold rush” is over anyway. I think there was a time, a few years ago, when you could get a big benefit by being the first one there. But, everyone noticed the opportunity, and now there’s lots of competition. From what I can tell, there are a few success stories, and the vast majority of iPhone apps languish in obscurity.

Here’s two contrasting articles. The first one is written from the user’s perspective. You’d get the impression that iPhone development is a gold-mine. But, of course, he only mentions the most popular applications:

Last month, I became an obsessive air-traffic controller. The culprit: a terrific game for the iPhone called Flight Control. The premise is simple: You’re faced with a crush of planes, and it’s your job to guide each one to its respective runway…. According to Firemint, the game’s publisher, the 99-cent app has been purchased more than 700,000 times since March; at its peak, it was being downloaded 20,000 times a day.
…
Last fall, [Ethan Nicholas] spent weeks—some of it while cradling his 1-year-old son—writing a tank-war game called iShoot. The game, which sold for $2.99, hit the App Store in October, and in January, it shot up to the top spot—selling hundreds of thousands of copies and earning Nicholas enough to let him quit his job and take up iPhone development full-time.
Source: Slate

The second article is about iPhone development from a software-developer’s perspective. It isn’t the gold-mine you’d think it is. There are 40,298 applications for the iPhone. The author does some estimates to figure out the average profitability of an iPhone application (about $1,881). At that amount, you’d better be cranking out a decent application every month to earn a bare-minimum living ($22k/year). Of course, there’s a lot of variability in this: some huge successes and lots of applications that earn next to nothing. So maybe “average” isn’t the best way to look at this. Afterall, if you have 70 applications that earn $1 million each, 2,000 applications that earn $1000, and 38,228 applications that earn $100 each, you’d end up with his same numbers. It would look more like a lottery under these numbers - almost everyone would end up poor, and a handful of people would get rich. These same numbers would also produce a bunch of “success stories” - 70 of them - that the media could write about, as if the iPhone was a sure-way to quit your day-job and earn a great living.

From what I hear, the top-selling applications tend to get a boost by getting onto Apple’s Top 10 list, and (to a lesser extent) the Top 50 list. Again, this suggests that there are some big winners, and a lot of losers.

Update, June 9, 2009: It’s nice to get a little confirmation of my view. In a recent blog post, iPhone developer Rick Strom says:

First, so you know where I stand among the 60,000 or 600,000 (I’ve heard both numbers) registered iPhone developers: I have nearly 20 apps in the app store as of this writing.

Four of those apps are on the charts:

* Zen Jar #34 Social Networking (paid)
* Zen Jar Lite #54 Social Networking (free)
* Spirit Board #36 Board Games (free)
* Spirit Board Pro #95 Board Games (paid)
…
With two apps on the [Top 100] paid charts, one would assume I’m rolling in dough. After all, this is a gold rush, right?

The reality is much more startling. In order to place #34 on the social networking charts, you need 30-35 downloads a day. At the standard app store pricing of .99, and after Apple takes its cut, that means your app needs to bring in a little over $20 a day to chart at that position. And social networking is a popular category.

Perhaps you’d expect the game charts to do better. Board games isn’t a wildly popular category, but it still might surprise you that it takes about 6-8 downloads a day to chart. That means if you are making around $4 a day you’ll be in the top 100.

So what does this all mean? Well keep in mind there are over 36,000 apps in the app store. If the apps on the category charts are doing those sorts of numbers, what do you think the rest of them are doing?

Nothing. Absolutely nothing. The aren’t selling at all.
…
I post these numbers so people can understand what is really involved here. The app store isn’t a sane marketplace at all, any more than the lottery is. When you submit an app, you are buying a ticket. Maybe you will be one of the few who makes a couple hundred grand in a hurry, but most likely you will be just another shlub tossing your blood, sweat and tears into the void where it will be ignored.