Jeff Ross is now working at Intel as Director of Marketing for the Ultra Mobility Group. To contact, email Jeff at jeff.ross@intel.com.

I’ve been leading mobile application development and distribution projects since 1998 (yes, it was possible to write a mobile app in 1998).  Traditionally in the US, many companies were able to develop “revenue significant” mobile application businesses based on BREW and Java.  For example…. at 9 Squared in 2007, our mobile apps and related services generated over $120M in gross revenue with a majority of that revenue coming from BREW deployments.

Contrary to the hype,  there are only a few companies making significant revenue from the iPhone App Store (read one of my favorite case study on Pizza Hut).  Most mobile development shops can’t produce a consistent and meaningful revenue stream. Sure… Angry Birds and Paper Toss are making a lot of money now, but is it sustainable?

I love what the iPhone has accomplished… the mass consumer adoption of Smartphones, the necessity to purchase a Wireless Data plan, educating users on mobile apps via TV advertising,  etc.  But….  it’s really hard to make a “revenue significant” business from iPhone apps alone.

I just read a June 22^nd blog post from Tomi Ahonen. It’s called Full Analysis of iPhone Economics – it is bad news. And then it gets worse. Click on the link and read it (it’s long, but worth the time).  He does a great job of breaking down the iPhone App Store numbers. My personal experience validates the majority of his claims.

I love this quote from Tomi: “The free apps hysteria is totally a repeat of the previous tech bubble, the dot-com bust of year 2000-2001”.  Tomi’s blog is a must read!

If you are just getting into the mobile application business, you need to question your overall business objective. Are you trying to build a margin rich business with short term positive ROI?  Increase the affinity and/or loyalty of your brand?  Are you prepared to invest in platforms other than iPhone (Android, WebOS, Blackberry, Windows Mobile, Brew MP, Symbian, etc) in order to reach your existing customers. What’s your free download-to- inApp purchase conversion rate forecast?  If doing in App advertising, what is your anticipated time per session usage expectations?

If you need some help with your mobile applications strategy and business model, please contact us here at Net Net Group.

Go read Tomi’s iPhone Economics post!