We are do a steady 2.5 million in sales per year, aiming for 4m next year.
The problem is that startups in the Valley are extremely narrow minded and aesthetically snobbish in their mobile approach.
1) There are 1 billion feature phone users around the world who have perfectly usable app stores.
2) You need to launch in more languages than just english, and on more app stores than just the US market -- Chinese, Hindi, Spanish and Portuguese at a minimum.
3) Apps that are not SAAS are throw away, impulse buys. They should be developed with that in mind.
4) Apps have a short lifespan and sell based on timeliness.
5) If you want guaranteed profit in mobile, build mobile extensions for established brands, don't try to build the next Angry Birds or Apple App clone.
6) Design matters, but not that much. Touch interface has made UI far more visceral, but the sale happens long before the user judges the design
7) IAP -- its icky but it works
8) Try lots of stuff rapidly and fail fast. 2-3 month cycles. You can get up to about 10 apps a month if you have a larger team and a good process.
Finally, this is nothing like 1999. Companies were failing with no product, spending 1 year + and not even launching. There were late round fundings for companies that literally had products that were figments of their imagination.
Now two guys in their garage can build a hit app with two macs and no funding what-so-ever. Don't confuse a highly active, easy to penetrate market with a bubble.