The one billionth app downloaded from the store was called Bump. Created by Bump Technologies, the application aims to make swapping contact information as simple as bumping two phones together. Many users may want to "bump" with the Connecticut teenager, Connor Mulcahey, who won Apple's grand prize for downloading the app. He will receive a $10,000 iTunes gift card, an iPod touch, a Time Capsule, and a MacBook Pro.

Preparing for the Next Billion

"The revolutionary App Store has been a phenomenal hit with iPhone and iPod touch users around the world, and we'd like to thank our customers and developers for helping us achieve the astonishing milestone of one billion apps downloaded," said Philip Schiller, Apple's senior vice president of worldwide product marketing. "In nine months, the App Store has completely revolutionized the mobile industry, and this is only the beginning."

As of Friday, the App Store has more than 35,000 applications available to consumers in 77 countries. The store lets developers reach tens of millions of iPhone and iPod touch users around the world.

This summer the iPhone OS 3.0 update will provide developers with more than 1,000 new APIs enabling in-app purchases, peer-to-peer connections, app control of accessories, and push notifications. The iPhone OS 3.0 will also add more than 100 customer features, including cut, copy and paste; Spotlight search; a landscape keyboard and a view for all key iPhone apps; and expanded parental controls for apps, TV shows, and movies.

The Evergreen iPhone Experience

What does the one billion app download really mean? Avi Greengart, a wireless analyst at Current Analysis, isn't sure. He follows up the question with several of his own: How many downloads have other platforms gotten? Is a download the same thing as a purchase? Was it one billion separate applications, or do application updates also count as downloads?

"I don't know and I am not sure it matters as much as the fact that Apple is incredibly involved in enhancing its hardware with new software," Greengart said. "Apple has sold almost 3.8 million iPhones. Did they sell less in this quarter than in the prior quarter? Yes, but just a little. Typically the product life cycle of a product doesn't extend quite so long in mobile. When it launches, everyone is excited and then sales drop off dramatically. That did not happen with the iPhone."

When consumers buy the iPhone, they know they are not just getting a cool entertainment device but something they can add to over time, Greengart said, and that makes a powerful story for Apple's margins. As long as it can run apps, he concluded, the iPhone is going to continue to be an exciting product.