This document discusses Apple's App Store business model. It explains that the App Store allows iPhone, iPod Touch, and iPad users to browse and download apps developed for the iPhone SDK. Developers can sell apps or offer them for free download directly to devices. The document then outlines how Apple's business model works, including its strong products that drive volume downloads, revenue sharing structure with developers, and how each user contributes revenue through multiple app downloads on average. Finally, it provides considerations for how Shuttle could build its own app store, including development, hosting options, payment processing, and marketing requirements.

1. App Store Study
Jouston Huang
Product Council / MobileSW
jouston_huang@tw.shuttle.com

2. What isApp Store
App Store是一個由蘋果公司為 iPhone和 iPod
Touch 以及 iPad 創建的服務，允許用戶從 iTunes
Store瀏覽和下載一些為了 iPhoneSDK 開發的應
用程式。
用戶可以購買或免費試用，讓該應用程式直接下載
到 iPhone或 iPod touch 。其中包含：遊戲，日
曆，翻譯程式，圖庫，以及許多實用的軟體。
- Wikipedia

3. How Applebusinessmodel works?
(I)
Strong Product(iPod, iPhone, iPad)
Volumedownloads(3,000,000,000+)
Fully opened SDK
Apple:Developer = 30%:70%
Low priced applications
Avg User Downloaded 10.2~18.4 application
Each user contributeUSD. 9.49~9.79

4. How Applebusinessmodel works?
(II)
Who: Customer base is iPhone, iPod and iPad users. Target customers are fashion sensitive,
Internet users.
What: App Store bridges developer and end user, the ONLY WAY to allow iPhone, iPod
Touch and iPad download application. From App Store Apple provided an up-sell opportunity for
itself and developers where end customer gets many supplementary goods.
Where: Where iPhone sells, App Store went to 70+ countries.
How to achieve: Through Apple sophisticated design and rich feature set, target
customer was pursue to buy iPhone, iPod and iPad. Application developers can utilize hardware
feature to provide attractive applications. Ex. Flash Light, Navigation, Need For Speed and other
games.
How to make money: App Store gets profit from end user download, Apple
share 70% revenue to individual developers. Multiple payment was accepted: AmEx, VISA, JCB,
Master, iTunes gift card and Paypal.

5. Ecosystem
Apple
Payment Developer

6. What'sShuttlecustomer need?
System Update
Lower maintenancecost
Supplementary Software
Boost devicesales
Up-Sell opportunity
Money and End customer royalty

7. How Shuttlebuildsan App Store?
Development Maintenance
Client Software
and SDK
Payment
Marketing and
Promotion
Self development Self host ShuttleBranded Shuttleowned Shuttle
Outsourcing 3 party host Customer Brand Customer Owned Customer or Joint
Venture

8. Pro and Con analysis
Self-owned Market Market-kit for
Customer
Pros
Up-sell revenuesource
Competence
diversification
Competence
Cons
Heavy Investment
High fix cost
Defocus
No PreemptiveAdvantage
available
MiddleInvestment
High variablecost
No PreemptiveAdvantage
available

9. What requiresfor building Shuttle
SW Market?
People: No talent available
Opportunity: Shuttlemaking Tablet and hold strong
position
Context: Market need aHD/Tablet SW Market
Deal: ~1M USD investment, ~600K USD return in
first year.

10. Investment for building an SW
Market
SDK:
Payment, DRM..etc.
DRM:
ShuttleDRM or market availableones(Film, TV,
Music, eBook, Games, Documents, Applications)
Bandwidth and ServerFarm:
Shuttlebuild oneor utilizeCloud services(EC2,
CHT..etc.)
Payment:
WorldPay or others

11. Rough Deal Analysis
Investment:
11 employees(2 Marketing, 5 engineer, 2 BD, 1 Admin
and 1 GM) cost 650K/yr(Min)
DRM system cost 100K/yr(Min)
Bandwidth and Server Farm cost 150K/yr(Min)
Marketing and Promotion cost 100K/yr(Min)
Total cost is 1M/yr(USD)
Deal:
AssumeConversion Rateis7%(Max)