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PHOTO: CHARLES MOLDOW (ADWHIRL), MOBCLIX (KRISHNA SUBRAMANIAN), STEVE LABADESSA FOR THE WALL STREET JOURNAL (SNAPTURE LABS), KEENEY + LAW (NGMOCO), JOHN PEERY (INDELIBLE SOFTWARE) |
App City
By YUKARI IWATANI KANE and RYAN KNUTSON In living rooms, garages and cubicles across the San Francisco Bay Area, a cottage industry is unfolding around the iPhone app. Despite the recession, hundreds of start-ups have sprung up in the region since Apple launched the iPhone two years ago and opened up the device so that third-party developers could create games and other software applications for it. “This is our dot-com boom,” says Samir Shah, 26, a co-founder of Snapture Labs, of Mountain View, Calif., which makes a $1.99 camera app that has been one of the top-ranked photography apps since September. Mr. Shah and two other Snapture co-founders graduated from Carnegie Mellon University in 2007 and moved to Silicon Valley shortly after. They work on their iPhone business from home in their free time, but said they hope to eventually turn it into a full-time business. REVENUE SHARING Apple, which has sold more than 30 million iPhones and 20 million iPod touch players, boasts more than 100,000 apps on its App Store, through which people can download games, entertainment and utility applications. Most are free—and make money from ads—or cost less than a dollar. Developers get 70% of any revenue they make from app sales, with the remaining 30% going to Apple. That is a better proposition than app development for other mobile phones has been in the past. Rivals now offer similar revenue- The popularity of the iPhone App Store had led its competitors to provide similar offerings. BlackBerry maker Research In Motion, Google and Palm have opened similar stores and have been trying to woo app developers with promises of better support. Though the costs of developing applications for all the devices are too high for many of the smaller developers, some companies, like Flixster, a San Francisco-based movie sharing social network, have created apps for all of them. The new cottage industry is thriving even as other businesses in the area cut back in the recession. Ngmoco, the San Francisco game app company founded in June 2008 by a former Electronic Arts executive, landed $10 million in financing in March. Since its inception, it has grown from four founders to more than 25 employees. As of late last year, Ngmoco had 11 apps in Apple’s App Store and was preparing more for release. ‘CENTER OF IPHONE WORLD’ Many iPhone developers have helped inject fizz back into the start-up scene by holding conferences and get-togethers. In August, a nonprofit called iPhone DevCamp had an event attended by 600 people to network and share ideas. The Silicon Valley iPhone Developers’ Meetup gathers once a month to trade Silicon Valley’s universities are also coaxing the iPhone app boom along. In September 2008, Stanford University began offering an iPhone app-building course taught by Apple’s engineers. It also posts the course online free. Roughly 130 students have taken the course since last fall, and more than one million people have downloaded the lectures, said Julie Zelenski, a Stanford computer-science lecturer. Edward Marks, founder of iPhone app start-up Indelible Software, is one student who took the Stanford course and then set up his company in Palo Alto in June upon graduation. The 23-year-old said he briefly considered moving to Hawaii but realized everyone he wanted to do business with was in the Bay Area. “We just realized that this was basically the center of the iPhone world,” he says. Some local techies are finding the iPhone app opportunity so attractive that they left jobs at more secure tech firms to jump into the scene. Sam Yam, 25, one of the founders of AdWhirl, says he left a job at a company called Loopt in February to start AdWhirl, which helps manage ad placement in iPhone apps. Five months after they created AdWhirl, it got $1 million in venture funding. Mr. Yam says the four-person company was profitable “even after paying fairly generous salaries.” In late August, mobile-advertising company AdMob agreed to acquire AdWhirl. And late last year, Google announced its plans to acquire AdMob for $750 million. Mr. Yam is now planning his next venture, which he says will have an iPhone component.
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