Apple launched its enormously successful iPhone in in the summer of 2007. A year later it followed up with the Apple App Store, which boasts that, for almost any thing you might need, "there's an app for that." Apps are small software programs developed to provide mobile in users with inexpensive business and personal services wherever they may be.
Popular allow iPhone users apps to access their business contacts via LinkedIn, call colleagues overseas via Skype, check delivery of their Zappos packages shipped via UPs, get the latest news on Twitter, and engage in customer relationship management using Salesforce.com. You can stream music via Pandora watch YouTube videos, access Facebook to check on your friends, post the latest photos using Instagram, or pin the latest fads about home décor on Pinterest
Even more important is the effect that apps have on the value of an iPhone. Arguably, the explosive growth of the iPhone is due to the fact that the Apple App Store offers the largest selection of apps to its users. Almost 1 million apps were downloaded 50 billion times as of spring 2013 Moreover, Apple argues that users have a better experience because the apps take advantage of the tight integration of hardware and software provided by the iPhone. The in turn, leads to network effects that availability of apps, in turn , leads to network effect that
increase the value of the iPhone for its users. Exhibit 7.5 shows how. Increased value creation, as we know from Chapter 6, is positively related to demand, which in turn increases the installed base, meaning the number of people using an iPhone. This in turn incentivizes software developers to write more apps. Making apps widely available strengthened Apple's position in the smartphone industry. Based on positive feedback loops, a virtuous cycle emerges where one factor positively reinforces another