One billion iPhone apps downloaded. But how many are worth it?

As the marketplace for iPhone applications grows more crowded, young and innovative software developers struggle to make their apps stand out.

Apple is on the verge of its billionth iPhone application download. That means that loads of iPhone users are eagerly turning their pricey smartphones into virtual fishing rods, sheets of bubble wrap, and gimmicky noisemakers.

Applications such as Flick Fishing, BubbleWrap (yes, you can actually pop bubbles with your fingers on the phone), and flatulence games have helped push Apple’s App Store to the brink of the billion-mark in just nine months.

While many iPhone users are apt to download the puerile, even tawdry, the iPhone and Apple’s App Store have indeed sparked a technology revolution – changing how consumers interact with computers and putting software development tools in the hands of novices – that is spurring a new economy built around a 4.7-ounce piece of plastic and glass.

They're also helping keep Apple's profits higher than expected. The company reported Wednesday that profits jumped 15 percent in its second quarter to $1.21 billion largely because of the sale of 3.79 million iPhones – a 123 percent bump from sales in the same period last year.

Suddenly, everyone from the biggest corporation to the tiniest firm, from experienced software engineers to people who have never coded a computer program in their lives, is fixated on a phone. They might want to hawk a product, promote themselves, or just design something cool. While their aims can be vastly different, they are striving for the same goal: making their app stand out amid the 25,000-plus applications now available for the iPhone.

“Over the past year, there have been a lot of developers, a lot of apps, and, frankly, a lot of junk,” says Dom Sagolla, a software developer who helped start iPhoneDevCamp, a gathering of iPhone developers that began soon after the first iPhone launched in 2007.

That was long before the opening of the App Store, which hosts third-party software for the iPhone, and before Apple was offering software development kits to programmers to build applications for its phones. Since Apple opened the store through iTunes in July 2008, it’s been a mad rush to get apps onto the store.

“The numbers kind of blow my mind,” says Mr. Sagolla, who is planning the third iPhoneDevCamp in August in San Francisco.

The most popular iPhone applications have been downloaded sometimes at a rate of 10,000 times a day. And at an average rate of 99 cents per download, Apple is generating serious money. It takes a 30 percent cut from what the App earns and the rest goes to the developer.

A high-tech gold rush

Some developers have struck it rich. The best-known of them is probably Ethan Nicholas, who developed the game called iShoot in his spare time and made more than $800,000.

But his is a rare case. While the release of a new version of the iPhone operating system this summer will give developers more features to work with, and probably spur more excitement, many iPhone programmers caution anyone who thinks app development is easy money.

“You'll have better luck in Vegas,” says Howard Cohen, an independent software engineer and consultant who has one app out and another in the works. “Most people do not make much money, or even [get] their costs back, when selling their apps for the iPhone.”

Mr. Cohen’s first app was called iHomePage and, as the name suggests, for 99 cents it allows users to create a customized home page on the phone – much like the home page on a Web browser. His next app, which he hasn’t submitted to Apple yet, is a much more complicated photography program called PhotoSphere (it’ll go for $4.99) that allows users to rotate images on a sphere to create a three-dimensional slideshow.

The challenge for developers in breaking out on the App Store is not only the growing competition from other app developers but because large corporations are also keen to produce apps – and often for free.

“[T]he App Store is a excellent opportunity for big companies and as a developer that’s very appealing,” says Cohen. That’s why so many software engineers are positioning themselves as iPhone developers.

For some, success

In addition to organizing iPhoneDevCamp, Sagolla started DollarApp to help others who might have the vision but not necessarily the means to produce apps and get them onto iTunes. He looks for applications that are smart, can be built quickly, and will be beneficial to the end user.

He’s had some success, too. Math Cards, a program designed to improve basic math skills, and Big Words, which displays words as big as possible for “grabbing attention,” were both staff favorites at the App Store.

Though he declined to talk about number of downloads or revenue earned from his two programs, he says, “Both of those have paid for themselves a couple of times over.”

Like many iPhone developers, Sagolla talks about the phone’s potential with an almost childlike excitement. As the device becomes more affordable and sophisticated, he says, it may make mobile computing the norm. “I don’t really think there’s a limit to this."

The excitement is shared by Mo DeJong, who is on the verge of releasing his first app. It's an animated series of lessons for guitar players.

“It's not a little toy soundmaker. There are tons and tons of those,” he says, sitting with a MacBook, an iPhone, and coffee cup in a San Francisco coffee shop seemingly built for techie developers working on their next iPhone creation.

As he demonstrates how the app will work – combining background music with moving scales – he explains that programming for such a small platform is anything but easy. He spent six months and between $20,000 to $30,000 working on the app, and he is still refining it.

In the end, the app will sell for $2.

Will it sell? “Who knows?” says Mr. DeJong. “It's kind of a crap shoot."