Updated Jan. 7, 2014 9:11 a.m. ET
As Apple Inc. AAPL -0.72% Apple Inc. U.S.: Nasdaq $540.04 -3.89 -0.72% Jan. 7, 2014 4:00 pm Volume (Delayed 15m) : 11.05M AFTER HOURS $538.62 -1.42 -0.26% Jan. 7, 2014 7:59 pm Volume (Delayed 15m): 297,636 P/E Ratio 13.53 Market Cap $485.49 Billion Dividend Yield 2.26% Rev. per Employee $2,127,850 01/08/14 Ahead of China Mobile's iPhone... 01/07/14 Sales of Online Movies Jumps; ... 01/07/14 Apple Wants E-Book Monitor Rem... More quote details and news » sells more iPhones and iPads, it also sells more apps. The volume of those sales became clear for the first time when Apple said on Tuesday it sold more than $10 billion worth through its App Store last year.
After taking its 30% cut, Apple appears to have generated more than $3 billion in revenue from the App Store last year—the vast majority of which likely was profit. The milestone reflects the virtuous cycle that has emerged from the success of its iPhone and iPad. When an Apple user buys apps or spends money in the App Store, it strengthens that person's ties to Apple's iOS platform and increases the likelihood of that user buying another Apple device in the future.
App Store revenue is a small fraction of the $91 billion generated by the iPhone in Apple's fiscal year ended in September. But it is a fast-growing business at a time when Apple's revenue growth overall is slowing.
Apple said December was the single best month for App Store sales, taking in more than $1 billion from downloads of nearly three billion apps. Since 2008, Apple said app developers have earned $15 billion from the App Store; that implies total app sales since then of more than $21 billion.
When Apple introduced the iPhone in 2007, then-CEO Steve Jobs was reluctant to allow outside software developers to write programs for the handset, worried that they would bog down the phone's core functions. The company changed course a year later and opened the App Store, a marketplace that paved the way for a new era of software development.
For the first few years of the App Store, Apple's lead in smartphones prompted many developers to release apps on its iOS platform first, and in some cases, exclusively. That gave the device an important leg up over rival phones using Google Inc. GOOG +1.93% Google Inc. Cl A U.S.: Nasdaq $1138.86 +21.54 +1.93% Jan. 7, 2014 4:00 pm Volume (Delayed 15m) : 2.53M AFTER HOURS $1138.65 -0.21 -0.02% Jan. 7, 2014 7:58 pm Volume (Delayed 15m): 23,338 P/E Ratio 32.29 Market Cap $373.28 Billion Dividend Yield N/A Rev. per Employee $1,059,710 01/07/14 Timely Purchase: Google Buys S... 01/07/14 The Morning Download: Why Auto... 01/07/14 Gartner Says Android Device Sa... More quote details and news » 's Android software. That dynamic, however, is starting to shift as the share of Android devices continues to grow.
Piper Jaffray PJC +2.74% Piper Jaffray Cos. U.S.: NYSE $39.81 +1.06 +2.74% Jan. 7, 2014 4:02 pm Volume (Delayed 15m) : 129,711 AFTER HOURS $39.81 0.00 0.00% Jan. 7, 2014 4:27 pm Volume (Delayed 15m): 5 P/E Ratio 21.57 Market Cap $616.32 Million Dividend Yield N/A Rev. per Employee $526,891 12/11/13 3-D Printing Stocks Catch Wall... More quote details and news » Cos. analyst Gene Munster said in a report on Monday that apps quality and usability are no longer a differentiating factor between Apple's iOS software and Android.
Based on user ratings for the top 200 paid and free apps on iOS and Android, app quality and experience between the two platforms is a "virtual tie," he wrote. "The biggest take-away from our review is that there is seemingly minimal difference in satisfaction between apps on either platform today," he said.
Mr. Munster said the next battleground will be the services exclusive to each platform such as Siri, Apple's voice-recognition digital assistant, and Google Now, its version of an intelligent personal assistant that can answer questions, make recommendations and predict what information users need.
Mr. Munster didn't return an email Tuesday seeking comment on Apple's sales numbers.
Apple said 2013 sales were boosted by apps such as Ellen DeGeneres's Heads Up! game, ProtoGeo Oy's Moves calorie counter, Simon Filip's Afterlight image editor and Kevin Ng's Impossible Road game.
Apple noted many of the year's biggest successes—including Candy Crush Saga, Puzzle & Dragons and Minecraft, among others—were created overseas.
The App Store currently offers more than one million apps for the iPhone, iPad and iPod Touch in categories such as news, games, sports, travel and more.
— Everdeen Mason contributed to this article.
Write to Daisuke Wakabayashi at Daisuke.Wakabayashi@wsj.com
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