The App Economy

When Apple opened the iPhone to third party development, it opened a “Pandora’s” box of opportunities to capitalize on (and justify the price tag on) the groundbreaking mobile device. Adding services to this new generation of mobile phones, and later tablets, has turned out to be a fertile ground -- unearthing a sector of the tech industry that, according to a new study released yesterday by Technet, is responsible for just under half a million jobs. Not too shabby.

In his State of the Union address, President Obama vowed to incentivize bringing manufacturing jobs back to the U.S., and halt the unfettered loss of American jobs caused by outsourcing American jobs to offshore operations. And there has been plenty of furor in the media about conditions in Apple’s manufacturing factories in China.

As it turns out, regardless of any changes that need to be made as far as outsourcing and manufacturing, the US economy is seeing a tangible boost from the newly designated “App Economy”. The Technet study found that the total number of jobs related to the creation and distribution of apps since the 2007 release of Apple’s iPhone is close to 500,000. That includes a conservative estimate of around 155,000 tech jobs in app companies, and the same again for non-tech jobs in these companies -- sales, marketing, HR. The study also cites an estimate that the App economy generated almost $20 billion in revenue last year.

While these apps aren’t always backed by venture dollars and growing companies, like Routesy for example, a majority of them have found a way to create an entirely new sector of the economy - and one that is growing at a significant rate. And while many of these newly created jobs are in the “traditional” innovation areas like San Francisco and San Jose areas, followed by New York and Seattle, other areas like Atlanta, Dallas and Philadelphia, not traditionally thought of as leading technology areas are experiencing significant growth, with even more on the horizon.

With growth in mobile devices expanding and the technological platforms getting more and more robust with each product cycle, the boundaries for the app economy are limitless, and, as the Technet study confirms, we are hopefully only seeing the beginning of the building of a new economy.