welcome back now we're going to talk about apps and the app economy when steve jobs first launched the iphone in 2007 he didn't allow third parties to put apps on it in other words he didn't allow other companies other than apple to put apps on it when you look at his first phone it had absolute they were all ones that were made or approved or sold only through apple why is that because steve jobs unlike others in the computer industry had a basic obsession with having end-to-end control over the user experience in other words he wanted to control the hardware and the software and any of the content and have it all be seamless early on with the original macintosh if you wanted to use mac software you had to have the mac hardware it came together unlike for example microsoft which was willing to license its windows machine to all sorts of hardware makers so you've got hewlett packard and dow and ibm doing it that was in some ways a good business model but if you had that tight end in control things would work better it'd be like a curated walled garden that was very beautiful and that's what steve wanted he was a control freak and so that's true even with the original ipod if you wanted songs you had to go to the itunes store you had to use the itunes software and you had to use an ipod apple piece of hardware they all came integrated together you couldn't get songs from some other place and put them on the ipod or software from some other place and put it on the ipod so that becomes the case when he does the iphone and he doesn't allow third parties or other outside companies to start developing apps or programs or services that can be easily put on the iphone now this is not a great way to have hundreds or thousands of apps and he knew that i mean he was always willing to allow some software from other companies to be put on macintosh but he just wanted to have control over it and so his top team and art levinson on his board of directors and others hammer him throughout 2007 after he's launched the iphone to open up to outside developers the chance to put an app on the iphone now steve listened but you know he was a pretty stubborn person but early in 2008 he finally says to them okay you if you truly think you're right now i'm wrong just go ahead and do it that was his way of saying okay i've changed my mind you're right i'm wrong let's do it so in july 2008 steve opens up the mac app store where any person who develops an application or a service has the chance to sell it to people and have it put on iphones now he had the best of both world speed because he didn't allow just anybody to sell it in android you can pretty much get any app you want you had to be approved by the people who curated the apple store you had to have it meet certain specifications the amount of revenue split had to be determined and you had to go through a process but still thousands and then millions of people who were developing apps got the chance to put them into the map app store and by having this best of both worlds model where he controlled what went into the store but he allowed people to try and companies and people in their garages and kids who developed that to apply to be put into the app store he made it pretty much open while still keeping some control so that's in july 2008 he launches it and it has certain rules that uh you know it's good for an app developer the developer gets to pick the price gets 70 of the revenues doesn't have to do hosting fees on the other hand the developer can't from within the app sell things to a customer without it going to apple and if you developed an app like i was in time magazine if we developed an app we didn't have a direct relationship with the customer we didn't have the customer's credit card number or zip code or the things our advertisers would want you went to the app store if you wanted to buy something within the app so apple creates this whole ecosystem where they're allowing games and journalism and all sorts of other products and sales and soon it proliferates the app store all sorts of people making things that probably steve jobs and apple never dreamed of in july in 2008 when they finally opened it up there's about 500 apps available now there are two million apps available and if you look too you can see how the downloads have increased exponentially so that now you know the downloads are up to 30 25 billion apps downloaded in a given year so that is a huge marketplace the app economy ends up suddenly within the very first year it's like a couple two billion dollars it's a whole new economy of people inventing things that you never would have thought of entrepreneurs being able to work in their garages and by now it's about 155 billion economy sometimes we say that technology destroys jobs that when you get a new technology like automated telemachines or automated elevator buttons it puts tellers or elevator drivers out of work but no the disruption as ada lovelace understood that comes from new technologies maybe it disrupts a lot of jobs but it creates a lot of jobs and there's no better example of that in recent years than the app store i mean who knew that we would want to be able to fling birds at each other or that we would take restaurants and be able on our phone to rate them or all sorts of music apps eventually you see an economy that allows things like uber and twitter which in amazon which had already been around to go to a whole new level netflix but also things that never would have existed were not for the apple store so it truly becomes a platform for a new economy and that's the important thing when an entrepreneur creates something it's useful for them not to just control the platform not just going to control the innovation but to make it a platform on which other people could build just like facebook allowed game makers zigna to build on facebook and then by the way neat capped them so that game makers don't trust that anymore apple became a platform upon which people could build their own businesses this helps a new economy but it also helps apple because apple becomes the necessary foundation for people who want to use these new services and finally it enabled something which we now call the peer-to-peer economy or the gig economy between iphone and its mobility and our ability to put apps on iphones and things like global positioning systems coming along and uh the phones being connected to the internet you have a confluence of innovation that allows for things we wouldn't have thought of like you can share your car by signing up with uber you can agree to do tasks for people through taskrabbit you can take your apartment or your house and put it on airbnb so we have this whole new sharing economy that is also driven by both the iphone and by the app store and all the inventions that go into it and so the lesson here is that sometimes an invention like the iphone will lead to things we could never have dreamed of i mean who thought when the iphone gets invented that things like airbnb and uber and taskrabbit would pop up like that and this is a new economy that allows sharing and peer-to-peer collaboration what does that remind you of it reminds you of the essence of the digital revolution that things can be peer-to-peer that if you want to put up your house for rent you don't have to go through a hierarchy of agents and gatekeepers and people control it if you want to be a driver for somebody you don't have to get a medallion and have a boss and work for the authority of the taxi company people can work peer-to-peer that's because our internet is done with a package switch decentralized system that's because everything on the web can be peer-to-peer and now it's because phones can have apps that connect people to people it's a whole different economy than that came along in the industrial revolution which depended on big company manufacturing and corporate structures now the iphone in the app store is the last newest way to help expand this notion of peer-to-peer sharing and peer-to-peer knowledge that's all part of the essence of the digital revolution thanks