Apple posts record revenues, blocks pay-per-install apps - and knows where you are

POSTED BY Global Administrator
Apple has been in the news again for a variety of reasons, not least because it trotted out another set of record results yesterday. The company posted revenues for the three months ended March 26, 2011 of $24.67 billion and net profits of $5.99 billion – both personal bests for a Jan-March quarter – on the back of strong sales of Macs, iPads and (particularly), iPhones, of which more than 18 million were shipped during the quarter. To my mind, what is particularly interesting about this set of results is that this is the second time in as many years that the iPhone registered a q-o-q uplift in sales in the first three months of the year. Unsurprisingly, there is normally a post-Christmas lull, when consumers shake off the torpor induced by an excess of turkey and alcohol to discover that the piggy bank is running on empty, and that splashing out on a new piece of shiny electronic touchscreen kit won’t be an option for a while. Thus, many vendors of shiny electronic kit, touchscreen or otherwise, normally experience something of a downturn at this point. In 2008 and 2009, the iPhone was no exception: in the first three months of 2008, iPhone sales fell by 26% q-o-q; in the corresponding quarter of 2009, there was a 13% q-o-q decline. And then, in the first quarter of 2010, there was a marginal (0.5%) q-o-q increase. This year, the scale of that q-o-q increase has leapt to nearly 15%. This is a strong indicator both of Apple’s continuing popularity, and of the underlying strength of consumer demand for smartphones. So for Apple, so far so good. However, the last couple of days have also seen the company attract criticism from several quarters, and for two entirely different reasons. In the first case, the app monetisation and distribution platform Tapjoy has complained that Apple has rejected several applications which run “incentivized install promotions”: i.e., if a consumer happens to download app (a) then he or she will receive some form of reward – such as a coupon or virtual currency – if he or she then downloads app (b). It is essentially a form of cross-promotion, and one of which Apple appears to take a dim view: according to Tapjoy,  the promotions violate section 3.10 of the App Store Review Guidelines; these state that "Developers who attempt to manipulate or cheat the user reviews or chart ranking in the App Store with fake or paid reviews, or any other inappropriate methods will be removed from the iOS Developer Program." The question then arises: at what point does such cross-promotional activity become “manipulation” or “cheating”? Retailers have used variants of such techniques for centuries. But, as Fierce Wireless observes, a more pertinent reason might be the fact that while Apple receives 30% of revenues from pay-per-download and in-app billing, it does not earn a share of pay-per-install app agreements. And now we have the iPhone tracker. A pair of British researchers, Peter Warden and Alasdair Allan, have discovered a file hidden within the back-end of devices running iOS 4 that stores location data pertaining to that device: in short, it knows everywhere that you’ve been since last June (when the OS was first launched). In response, the two researchers have released a free OS X app which allows consumers to view this data on a map. The fact that Apple devices were quietly collating this data has rapidly prompted various individuals to raise concerns about invasions of privacy. That said, point number one: the phones have known our approximate location for some time, due to these wonderful new-fangled concepts called GPS and triangulation, so it shouldn’t be any surprise that at least one vendor has inserted a piece of code that, as it were, takes continuous notes on this. Point number two: this would have been a splendid aide-memoire in my twenties, inasmuch as there were quite a few nights after which I had no memory whatsoever of where I’d been and it would have been quite nice to find out. (I occasionally used a friend’s gonzo journalism in a national periodical for much the same purpose, but sadly Candid Dan no longer writes about boozy nights in the West End and now devotes his time to selling mobile handsets. Also, his column was fortnightly, while our little iPhone file is clearly 24/7, does not drink alcohol and is thus much more reliable, if less entertaining, in its recollection of events.) To summarise, then: on revenues, good. On pay-per-install, less so. On location-based data: it wasn’t me, I wasn’t there, and my phone can prove it.