Polar Bear Farm

I don’t think it’s any secret to most that the launch of the iPhone SDK and the App Store was rushed. Having seen the state of the iPhone frameworks in version 1.x of the iPhone OS through my jailbreak work, version 2.0 of the OS really did clean a lot things up quite dramatically, there was a lot of work done. It was actually an extremely impressive feat. To anyone who had developed under jailbreak it was clear why Apple had not released an SDK for developers when the iPhone first launched, it simply was not in a state which was releasable, Apple were still working things out themselves.

It’s also interesting how the launch of both the iPhone and the App Store forced Apple to stray briefly from its usual tight lipped policy of never commenting on unreleased products. The iPhone was announced months before it was available, as was the App Store. There are a number of reasons why they really had no choice for this particular product launch. I’m sure one of the reasons for their standard no comment policy is that it forces hard deadlines on themselves. My perception is that Apple don’t like shipping products which are not ready for prime time, they’ve made that mistake in the past and paid for it. Hard deadlines can interfere with that philosophy, hence the first most people know of new Apple products is when they’re released. I think those deadline pressures came very close with the original iPhone, then again with the launch of the App Store and 2.0 firmware.

The App Store has been modeled almost exactly off the iTunes Music Store, in many ways it’s the obvious way to go. It’s got the store front, it’s got the ranking logics, it’s got existing user accounts and billing info, it’s got the reporting, etc etc. The Music Store is a clear success, so why tinker with a winning combo? Well fundamentally, apps aren’t music. It’s that simple. The one price fits all model of music just doesn’t jive with apps. Why? Because apps are wide and varied in their complexity, function, target market size etc. The Music Store is optimised for this one price fits all scheme. The ranking algorithms etc are all perfect for that case. That’s really the first major flaw in the App Store design at the moment:

The One Price Fits All Assumption.

The ramification for this assumption in the App Store is that as sales on the store are driven significantly by visibility. The Top 100 list rules. You need your app on that list! While the exact details of the algorithms used to generate these rankings are secret, it’s clear that it’s overwhelmingly driven by app download count, on some sort of rolling average. The easiest, cheapest way to increase your download count, is by dropping the price of your app to $1. It use to be that developers would change their app to free for a few days, then switch to paid, then ride the Top 100 Paid list that way, but that practice has since been blocked by Apple. $1 is the new free in this game now. So the end result of this one price fits all assumption, is that in general apps tend to converge on one price, and that one price being $1. This isn’t just speculation either. We’ve experimented with pricing a little, and the results are disheartening. As one fellow developer put it: “The App Store makes me feel dirty… dirty as in I just participated in a shit fight and now I have to go home and take a shower.”

First looking at ‘Record‘, our successful audio recording application. On October 16th, we doubled the price from $1 to $2, subsequently download numbers dropped by 59% to 41% of their previous numbers. That’s significant. At the same time we increased the price of ‘Note Pad‘ our iPhone notes replacement application, from $2 to $3, and downloads dropped by 63% to 37% of their previous numbers. On November 22nd we again increased the price on ‘Note Pad‘ from $3 to $4, and once again download numbers dropped disproportionately by 60% to 40% of their previous numbers. Clearly it seems that in our experimenting, it is not possible to maintain revenue while raising prices. These are sobering numbers, and support the idea that the one price fits all assumption, which powers much of the app store rankings, is a positive feedback loop biased towards pushing most app pricing towards the $1 price point. Of course there are other factors involved in this, however I think that this assumption is a dominant factor driving this. So what’s the solution? Easy, tweak the ranking algorithms to try and avoid the current natural discrimination against variable pricing. Simply give more weighting to app revenues, and maybe even bring in ratings into the ranking algorithms to try and push more of the best apps into the list, rather than the just the best of the least expensive apps.

Demo Applications

The ability to offer demo version on the App Store is simply not possible. This also contributes to the low pricing trend. Many customers are reluctant to shell out money, even $5, $10 or $15 for an application they can not test in some way first. ’Lite’ versions are not demos. With all the applications we create, we’re trying to build up trust within our customer base, so that when they see one of our apps on the store that they don’t own, they can purchase it with the confidence that it’ll work, and work well. The ability to offer time limited demos of applications is a simple way to help build this customer trust and confidence quickly. Currently it’s easier to discount the price of applications to a point where people don’t care if they download an app, and it turns out to be absolute crap. It’s simply not a good situation for customers or developers.

Customer Reviews

This is where some improvements have already been made on the App Store, which is great to see! From a developers stand point, while there are many changes which would be good to see, two of the biggest additions to the system would be the ability to flag blatantly false reviews, irrelevant comments, and the like on your own apps and have them investigated in a priority ‘developer reported’ queue across all stores. Currently there is no mechanism for developers to report customer reviews in stores outside the one they hold an iTunes account in, even using the existing reporting methods. Secondly, many customers see the review section as a support forum. It’d be great if developers could have one reply per review, to respond to questions, or to correct inaccuracies.

Of course we as developers need to take responsibility for the success of our applications, we can’t rely on Apple to sell our products by virtue of simply having them listed on the store. However the things i’ve mentioned are significant issues which in my mind need to be improved. Hindsight is 20/20 as they say, but a lot of these flaws really do beg the question, did anyone at Apple really think through the App Store design and operation, or was it just a case of hacking on an apps section to the Music Store to meet a deadline?

Finally I urge developers and customers alike to contact Apple and express your opinions and thoughts through the channels they provide: enhancement requests through http://radar.apple.com Developer Relations contacts, and Technology Evangelists for developers, and Apple’s official feedback channels for customers: http://www.apple.com/feedback/ They can’t improve things if they don’t know about them, so help them out by letting them know what you think.

Layton Duncan

It’s coming up to 5 months since the App Store launched, and things have panned out very different to how I had imagined. You know I had been looking forward to the launch of the App Store. We could finally get our software out there, support it properly, and have all the time consuming overhead of managing payments, license key generation, distribution etc out of our hands, and spend more time doing productive stuff like developing and making our apps better.

We were making good money off our Jailbreak apps selling them for $10 a piece, some people liked them so much they donated over $80 a piece for them. We invested countless hours developing them, not only because it was a fun challenge, but because the support was there from our customers to be able to live off this and be able to develop them full time.

This was a market with at its peak maybe around 1 million phones, users had to pay using PayPal on their iPhone (a horrific experience if ever i’ve seen one), then wait for a license key to be generated so they could enter it into the app on the phone, which would unlock all features or to get rid of popup reminder dialogues. This is a world away from the seamless experience of purchasing songs or apps from iTunes. Naturally we though that the launch of the App Store would not only open us up to a significantly larger market, but that the time consuming process our customers had to go through previously would disappear, and sales would continue heading upwards.

The reality is that we barely manage to match the money we were making with our Jailbreak applications through the App Store. Even at the peak so far, where “Record” was Top 10 paid downloads in 22 countries, and DuckShoot in 10 countries, sales barely reach those seen in Jailbreak.

The point here is that in the current market it is very difficult for professional iPhone development companies who’d love to commit fully to developing great apps for this platform, to be able to do that sustainably. The market is not at a size where $1 apps can really sustain dedicated iPhone development houses, skewing the market towards part time, after hours developers with a day job to support themselves, and App Store income as ‘pocket money’. 

While that in itself is not a problem, we know first hand how hard it is to provide the level of support we need for our products. It’s a time consuming part of the business, one we’d love to improve, but one which is a constant time battle, there’s simply not enough resources, which ultimately comes down to not enough money. This time balancing act is even more apparent for part time developers, and often does end up effecting quality, both in customer support, and continued application development.

But all this isn’t just groaning about the state of things, it’s something to hopefully start triggering thoughts about why the market is currently skewed like this, and how it can be improved for customers and developers alike. We want to be around to see our 2nd year anniversary, still helping to make this great platform even better, but ultimately the market and developers themselves will decide how things play out over time. I’ll add my opinions on things, having seen things from the very start of this game.

I have to say this is a topic which i’ve been reluctant to write publicly about until now (i’m expecting some ‘interesting’ responses), preferring instead to file bug reports, feature enhancements, and talk directly with our Apple Developer Relations contacts about, even emailing the top dog himself on one occasion. Apple does listen, but clearly can not always act as nimbly as some would like. But it’s far easier for them to fix or change things if they get feedback directly through the channels they provide. While the App Store has improved slowly since launch, it had major flaws from day one, which is the topic for part two of this post, along with some cold hard stats on App Store economics.

Layton Duncan