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SAN FRANCISCO BAY AREA NOVEMBER 12, 2009

iPhone Apps Take Root as Cottage Industry

Even as Other Bay Area Industries Cut Back, Hundreds of Start-Ups Sprouted to Develop
Programs for Apple's Device

Article Slideshow Comments (5) MORE IN SAN FRANCISCO BAY AREA »

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By YUKARI IWATANI KANE and RYAN KNUTSON

There is a hint of that old boomtown feeling again in the Bay Area -- this time in living rooms
and garages and cubicles where a cottage industry is unfolding around the iPhone app.

Despite the recession, hundreds of start-ups have sprung up in the area since Apple Inc.
launched the iPhone two years ago and opened up the device so third-party developers could
create games and other software applications for it. "This is our dot-com boom," said Samir
Shah, 26 years old, a co-founder of Mountain View-based Snapture Labs LLC, which makes
a $1.99 camera app that has been one of the top-ranked photography apps since September.

Mr. Shah and two other Snapture co-

App City's Pioneers
founders graduated from Carnegie Mellon
University in Pittsburgh in 2007 and moved
to Silicon Valley shortly after. They work on
their iPhone business in their free time from
one of their apartments, but said they hope
to eventually turn it into a full-time business.

Apple, which has sold more than 30 million

iPhones and 20 million iPod touches, boasts
more than 100,000 apps on its App Store,
View Slideshow
through which people can download games,
Steve LaBadessa for The Wall Street Journal
entertainment and utility applications. Most
Snapture's co-founders work on their iPhone
business in their free time from one of their are free -- and make money from ads -- or San Francisco Bay Area Video
apartments, but hope to eventually turn it into a full- cost less than a dollar. Developers get 70%
time business.
of any revenue they make from app sales,
More photos and interactive graphics with the remaining 30% going to Apple. That
China Real Time: China's iPhone Apps is a better proposition than app development
for other mobile phones has been in the
past. Rivals now offer similar revenue-share models. Truck Plunges from News Hub:Google, Bay Bridge Back in
Bay Bridge, Driver Verizon Team Up to Business
Killed Take on iPhone 1:34
As a result, many Silicon Valley techies have been lured to the iPhone app start-up scene. 0:57 2:09
According to Mobclix Inc., which operates the iPhone's largest ad-exchange network -- a
marketplace to connect advertisers and app developers -- 41% of its 4,000 app developers are
in Northern California. The region with the second-largest number of app developers is New
Read Articles in San Francisco Bay Area
York-New Jersey, with 14%. Life on Severance: Comfort, Then Crisis
Unemployed Americans who have used severance pay and

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iPhone Apps Take Root as Cottage Industry - WSJ.com 11/11/09 5:45 PM

"A large concentration of people who are savings to maintain their lifestyles are still out of work, and running
Journal Community out of funds.
doing [iPhone apps] are Internet
Discuss: What's your favorite iPhone app? When Severance Falls Short
entrepreneurs...and a lot of Internet
entrepreneurs are in the Valley," said Matt As the U.S. economy continues to struggle, many Americans
who've been out of a job for a while are facing a tough choice:
Murphy, who oversees the $100 million iFund, a venture-capital fund run by Kleiner Perkins Work anywhere or hold out for something better?
Caufield & Byers that backs iPhone app developers.
Spring Island, Naturally
The popularity of the iPhone App Store had led its competitors to provide similar offerings. An abundance of birds and other wildlife attracted the owners of
this home on South Carolina's Spring Island.
Research In Motion Ltd., Google Inc. and Palm Inc. have opened similar stores and have
been trying to woo app developers with promises of better support. Though the costs of Dorothy Rabinowitz: Dr. Phil and the Fort Hood Killer
developing applications for all the devices are prohibitive to many of the smaller developers, His terrorist motive is obvious to everyone but the press and the
Army brass.
some companies, like Flixster, a San Francisco-based movie sharing social network, have
created apps for all of them. McGurn: The Man Who Made Pelosi Cry 'Uncle'
Bart Stupak wins a ban on federal funds for abortion.
The new cottage industry is thriving even as other businesses in the area cut back in the
Joe Montana's California Retreat
recession. Ngmoco Inc., the San Francisco game app company founded in June 2008 by a
former Electronic Arts Inc. executive, landed $10 million in a financing round in March. Since Confessions of an ObamaCare Backer
its inception, it has grown from four founders to more than 25 employees. Ngmoco has 11 See All
apps in Apple's App Store and is preparing more for release in coming months. RSS Feed

Meanwhile, EA, one of the biggest publishers in the videogame industry, said this week that it
would cut 17% of its work force in its second round of restructuring in the past year as it Most Popular
vowed to focus on a smaller number of games. The company is also investing in new kinds of Read Emailed Video Commented
online games, including apps for the iPhone and other mobile devices.

Many iPhone developers have helped inject fizz back into the start-up scene by holding 1. Is It Time to Retire the Football Helmet?
conferences and get-togethers. In August, a nonprofit called iPhone DevCamp had an event
2. Army Wasn't Told of Hasan Emails
attended by 600 people to network and share ideas. A group called the Silicon Valley iPhone
Developers' Meetup gathers once a month in Palo Alto to trade project ideas. 3. Life on Severance: Comfort, Then Crisis

Silicon Valley's universities are also coaxing the iPhone app boom along. In September 2008, 4. Opinion: Jenkins: The Economic Uses of Al Gore
Stanford University began offering an iPhone app-building course taught by Apple's
engineers. It also posts the course online free. Roughly 130 students have taken the course 5. Long Strange Trip for Missing VW Van
since last fall, and more than one million people have downloaded the lectures, said Julie
Most Read Articles Feed
Zelenski, a Stanford lecturer in computer science.

Edward Marks, founder of iPhone app start-up Indelible Software LLC, is one student who
took the Stanford course and then set up his company in Palo Alto in June upon graduation.
S.F. Stories From Around the Web
The 23-year-old said he briefly considered moving to Hawaii but realized everyone he wanted
to do business with was in the Bay Area. "We just realized that this was basically the center Edited by The Wall Street Journal
of the iPhone world," he said.
Hewlett Packard to Buy 3Com
via KCBS Bay Area News »
Some local techies are finding the iPhone app opportunity so attractive that they left jobs at
more secure tech firms to jump into the scene. Sam Yam, 25, one of the founders of AdWhirl, 28% of San Francisco homes on sale have had price cut
a Palo Alto ad network company for iPhone apps, says he left a job at Mountain View service via The San Francisco Business Times »
company Loopt Inc. in February to start the company, which helps manage ad placement in
Suspects in Richmond Gang Rape Arraigned
iPhone apps. via KCBS Bay Area News »

Five months after creating AdWhirl Inc., it got $1 million in venture funding. Mr. Yam says the Oakland Cracking Down On Abuse Of Parking Placards
four-person company was profitable "even after paying fairly generous salaries." In late via CBS 5 »
August, San Mateo-based mobile-advertising company AdMob Inc. agreed to acquire AdWhirl
OBAMA EXPECTED TO ASK FOR MORE NATO TROOPS IN
for an undisclosed sum. On Monday, Google Inc. announced its plans to acquire AdMob for
AFGHANISTAN
$750 million. Mr. Yam is planning his next venture, which he says will have an iPhone via San Francisco Sentinel »
component.
Vehicle Hits, Kills Cyclist Near De Anza College
Write to Yukari Iwatani Kane at yukari.iwatani@wsj.com and Ryan Knutson at via CBS 5 »
ryan.knutson@wsj.com
Long-Closed Streets Reopen In Sunnyvale
via CBS 5 »
MORE IN SAN FRANCISCO BAY AREA

Lawrence Berkeley Lab to work with Utility Integration Solutions on

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via The San Francisco Business Times »
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