Best Invention Of 2008: Apple’s App Store

For those of us outside of the iPhone universe, we have no idea on the sheer magnitude of the kind of sea change that occurred at Apple (AAPL) this year.

Apple has been able to take an iTunes sales platform and convert that over to software sales. It’s not just that they did it, but that the developers and customers have followed. There are now thousands of applications that can be downloaded. Already, the app store has almost 2.2 million downloads a day.

It’s this kind of simple brilliance that leads to profits by the billions. Think of Google’s (GOOG) use of auction rates for advertising space, Ebay’s (EBAY) online auction format, or the iTunes music sales platform. These are game-changing technology applications.

The application (app) market is expected to reach $1 billion this year. Apple’s expected share: 30%. The interesting thing is that Apple receives 30% of every dollar spent on an independent’s app. That revenue will only increase as the applications grow.

The kind of creative explosion couldn’t have happened without the innovative technologies within the Apple iPhone - from GPS positioning, to gyroscopes and accelerometers.

Ultimately, the app store is bigger than the iPhone or the apps themselves. It is a revenue stream driven by the creative power of the masses. And those kinds of opportunities are what investors live for.

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