The App Store creates more room at the top

Apple held its "It's Only Rock and Roll" event last week in San Francisco, and as the name suggests, the spotlight fell squarely on the iPod media player line as the firm introduced a Nano with a video camera and larger screen, a 64-gigabyte version of the iPod touch and a 160-gigabyte iPod Classic in tandem with a series of price reductions. Apple also unveiled iTunes 9, adding a series of new desktop and mobile features that promise to make it easier to discover, purchase and experience multimedia content. And last but not least, Apple CEO Steve Jobs made his return to the public eye five months after receiving a liver transplant. But perhaps the most significant development to emerge from the event wasn't even announced during the conference itself: Apple added a new Top Grossing Apps category to the App Store's homepage alongside its existing Top Paid Apps and Top Free Apps countdowns, ranking iPhone and iPod touch applications according to revenue totals instead of download volumes.

Apple has not officially commented on the Top Grossing Apps category, but it seems safe to assume the new ranking is a response to criticisms that it's virtually impossible for pricier, more complex applications to stand out amidst the deluge of bargain-basement 99-cent apps. Late last year, Craig Hockenberry, principal and engineer with The Iconfactory, the software firm behind top-selling App Store downloads Frenzic and Twitterific, wrote an open letter to Jobs contending that the growing proliferation of bargain-priced iPhone applications is inhibiting product development: "Developers are lowering prices to the lowest possible level in order to get favorable placement in iTunes. This proliferation of 99¢ ringtone apps is affecting our product development... We have a lot of great ideas for iPhone applications. Unfortunately, we're not working on the cooler (and more complex) ideas. Instead, we're working on 99¢ titles that have a limited lifespan and broad appeal. Market conditions make ringtone apps most appealing." This summer, a study published by hybrid location system developer Skyhook Wireless noted that the App Store is overrun by thousands of mass-produced, bargain-priced "bulk apps" (i.e., template-based mobile applications sold at the same price point with the same look and feel but different content), adding that these local search and travel guide applications now account for around one third of total iPhone LBS apps.

During Apple's quarterly earnings call in mid-July, COO Tim Cook hinted that relief could be in sight--asked whether the company plans steps to help consumers "separate quality applications from the garbage," Cook responded "We are always looking for ways to categorize applications differentially. We realize there is an opportunity there for further improvement, and we are working on that." The Top Grossing list is a significant step in the right direction: As of Monday night, it included such big-ticket downloads as Navigon AG's MobileNavigator North America ($89.99), TomTom International's TomTom U.S. & Canada ($99.99) and Shotzoom's Software's Golfshot: Golf GPS ($29.99)--all of which are absent from Apple's list of the 100 most popular bestsellers in the Top Paid Apps category. Without a Top Grossing list, it's unlikely these kinds of pricier apps would ever enjoy the visibility and sales push that comes with marquee App Store placement. It's too early to know whether the new list is sufficient to convince developers like Hockenberry that the App Store is finally a safe harbor for more complex and costly applications, but if nothing else, it's a sign that Apple understands app quality is at least as important as app quantity. -Jason

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