• by Josh Lovison , April 29, 2009

Media Person of the Year Maksim Rogov

Apple's App Store is changing the world. Where YouTube brought in the golden era of user-generated content, the App Store is bringing in the age of small-business-generated content. Fitting, then, that it wasn't Apple's idea, but that of a small business.

Think back to August 2007: The primary debates are under way. Michael Vick is in court on animal cruelty charges. Mere months ago, Apple launched the iPhone. And this month, developers from a small software company called Nullriver released Installer.app, a program for the iPhone.

Some background is in order: When Apple released the iPhone, they had a clear "Web-based applications only" policy for development. Many developers wanted to do more with the device, and hobbyists worked day and night from the release of the phone to "jailbreak" it - to find a way to mess around. Eventually, they figured out how to write applications for the phone, but installing new applications or updating existing applications was difficult.

The Installer.app provided a simple, easy-to-use interface, where finding new applications that made managing existing installations a trivial task. The software made a painful process simple enough that grandmas could do it. Soon the software was packaged with automatic "jailbreakers," allowing nearly any tech-savvy individual to get apps on his or her iPhone.

In its heyday, the software could be installed on a default iPhone by just visiting a Web page with the device. There were numerous cases where mischievous individuals would load that page up on the display units in Apple stores, and download games onto the phones. Around the country, store staff were being asked how to get games or IM clients onto phones by users who had seen these apps on their friends' phones.

Within months of Installer.app's release, there were rumblings that Apple was having a change of heart and would allow native apps on the iPhone. The eventual result was Apple's unveiling of the iPhone Software Development Kit (SDK) and App Store in March of 2008.

Back to the present. The App Store has had over 20,000 applications added to its library and seen more than 500 million downloads. Google's Android, RIM's BlackBerry, Microsoft's Windows Mobile 6.5, the Palm Pre and Symbian OS either have created or will create a similar offering this year. The entire mobile industry is evolving.

Installer.app was more than just a catalyst. Apple's App Store was nearly a direct clone of the software, from user interface to features (and when Apple is copying user-interface design, it means the original was a very good product). Apple deserves significant credit for adding a business model to the framework, but Installer.app established the distribution mechanism, without which a business model would be moot. And since Apple copied Installer.app, when everyone else now copies the App Store, there aren't patents that need to be worked around. Were it not for Maksim Rogov, Nullriver's president, and his conviction to dedicate company resources toward building and maintaining Installer.app for free, the foundations of the mobile industry would remain unshaken.

The App Store, and the story behind it, mean more than just a change within mobile. They represent a greater paradigm shift. Yes, that is an obnoxious term, but it is nevertheless an accurate one. The world has a genuine paradigm shift on its hands.

The story behind Installer.app and the App Store represents the uncontrollable nature of this shift. Apple did not welcome the initial efforts of iPhone hackers and hobbyists with open arms. The iPhone was designed to be a closed system, and Apple fought back with each update to regain control over its product. Small businesses are building out the software that's bringing in the new age of media. Products like Boxee appear from thin air and start to shake the foundations of TV. The earliest example is probably Napster, which first brought in the era of digital content distribution.

The App Store isn't just a story of uncontrollable change though. The current state of the App Store is, by all appearances, the first case study in the death of the corporation. In 1939, economist Ronald Coase wrote the essay "The Nature of the Firm," which suggests the reason companies exist is to offset transactional costs. Essentially, in 1939, the costs of finding the right person for a job, getting them up to speed, and negotiating a rate, could end up costing more than just hiring a full-time employee. Coase reasoned that the size of a company is determined by the size of the associated transactional costs. Since the birth of the Internet, many of those costs have come crashing down. By providing an SDK to ease development and a distribution platform that offers massive reach at a minuscule cost, the App Store is the first time corporations and small businesses have been put on equal footing to battle it out. By all appearances, small businesses are winning.

It's been said there are no coincidences. Looking at the global economic meltdown, and keeping the App Store in mind, begs the question: Is the source of our troubles purely one of economics? Or is an obsolete industrial infrastructure also at fault? The App Store may just be the tip of the iceberg - the start of a painful but necessary metamorphosis.