The Emperor’s New Clothes
A lot has been written about the success of the App Store, over 50,000 apps available, 1.5 Billion downloads in its first year, talk about how it’s unprecedented etc. However I think it’s long past time for a reality check here. This is a no holds barred, deadly serious, but sometimes snarky look at the App Store. For those with short attention spans, here’s the 140 char summary of what follows:
It’s interesting to contrast the meaningless PR fluff around the App Store, with what was happening in Jailbreak, long before the App Store was around. This community was per device as successful in terms of number of downloads, and vastly more successful from a business viability perspective. There was significantly more innovation, and creativity in the app offerings. But just as importantly, it was very possible for us to run a real business even without any official development tools, with no seamless way to charge customers, and a potential market of roughly 1/50th the size of what exists today.
Given all those challenges in Jailbreak, you’d have though that the iTunes Store would take a good thing, fix the things which weren’t great, and introduce the world of iPhone Apps to a wider audience. Instead it has introduced factors which caused the bottom to fall out of the market, perhaps irreparably so.
Today, if someone offered me the choice between operating a business in a jailbreak style market (with exact same conditions as it was pre App Store) vs operating a business on the App Store, i’d pick jailbreak without question. Of course things have changed significantly since the App Store has been around, but the fact that a ‘hacking’ community had more business viably than the App Store, is a reflection of Apple’s failures here.
The sad reality of the App Store is that there is just no market there capable of supporting full time dedicated iPhone development companies. Everyone knows it, from the most establish games studios down to startups trying to build dedication companies around this platform:
Ian Lynch Smith of Freeverse: “The collapse of the initial pricing model of $10 and $5 games to 99-cent and $3 games has made everyone very cautious. We’re trying to keep our developments to three or four months at most.”
Jon Fortt of Fortune: “A casual observer surfing through the offerings on iTunes today could easily mistake it for a digital dollar store. Though the place is crowded with options, the app store bestseller list is dominated by 99-cent games like the Moron Test and Sally’s Spa — hardly the foundation of a new mobile economy.”
John Carmack of id Software: “If [iPhone] games could have a reasonable shelf life at $9.99, you will start seeing multi-million dollar development budgets as the market continues to grow. But if it turns out the only way you end up being successful on the iPhone is games that cost a couple dollars, you’re never going to achieve that parity with the other handhelds.”
You can then look at the strategy taken by EA recently, in creating offshoot 8lb Gorilla. Essentially forced into doing something because Apple have killed the viability of anything above $0.99. 8lb Gorilla is setup to churn out limited scale $0.99 games every few weeks. All in an attempt for EA to find some viable way to operate in a market they clearly feel a need to have a presence in. I have my doubts that this will work, even with the featuring Apple gives companies like this. This move by EA should horrify Apple. The alarm bells should be ringing, cause the ship is sinking.
These problems can be directly attributed to the market conditions Apple have created through either a total and utter lack of planning and incompetence when building the App Store, or an intentional strategy set out to suppress application prices, with the sole intent of helping to drive device sales.
What’s most concerning is when Tim Cook was asked specific questions around this in the latest financial results conference call. There was no acknowledgement of the real issues which exist around pricing, it was in fact dismissed, saying developers are just pricing based on elasticity analysis:
Charles Wolf - Needham & Company
Okay, well, let me ask a question about the App Store then. In terms of application prices, there appears to be a race to the bottom. I’ve noticed that there’s an increasing number of $0.99 offerings. Do you regard this as a concern and if so, are you taking any steps to enable consumers to separate quality apps from the garbage?
Timothy D. Cook
Charlie, we are always looking for ways to categorize apps differently and we do have some ideas in this area. As you know, today we do it by type of App and also have show popular apps and top-selling apps, et cetera. We realize there’s opportunity there for further improvement and are working on that. In terms of the price, the developer sets the price and so it’s up to the developer what to charge and I think what they are doing is they are doing what any good business person would do, is doing the elasticity analysis and deciding where to best set their price. I would think as the installed base grows more and more and more, it makes more and more sense to have a bit lower prices but that’s totally up to the developers and I am sure each of them may do that in a little different manner.
These comments infuriated me. It shows that Apple, at the highest level, has a total and utter lack of understanding of the issues which exist around App Store pricing and the consequences of that. The biggest problem with the App Store is not a categorisation problem, it’s more than clear that the App Store in its current implementation forces virtually all app prices to the $0.99 price point. There is no debate, there’s no elasticity analysis required, it’s the price point virtually all applications are pushed to. It’s unsustainable for all serious developers, and it’s killing investment in innovation and creativity, it’s killing the platform.
How could Apple get this so wrong? How have they managed to kill any REAL creativity and innovation on a platform which is clearly one of the best around, from both a user perspective, and a technical development perspective. A platform with proven business viability before Apple had even entered the scene.
Any developer who has experienced the business side of the App Store, iTunes Connect, the app submission process, is well aware that there is virtually zero care and attention to detail taken, it barely works for its intended purpose, and that lack of care and attention even creeps into the customer facing App Store. Put simply, the whole thing is entirely unprofessional, bordering on incompetent, and Apple should be highly embarrassed by it. The astounding thing is that this is so at odds with what most people expect from Apple: it’s certainly a far cry from the usual obsessive attention to detail in most of its consumer facing products.
There are so many fundamental flaws in the App Store design which i’ve written about previously, and filed bug reports a LONG time ago on. These have simply killed the viability of the iPhone platform for serious businesses. I won’t rehash all those flaws in this post, you’ll find them in my other posts.
There are two options to fix this as I see it:
1. Close the iTunes App Store storefont and simply give developers an API for payment processing and binary delivery using iTunes Accounts. That way Apple rankings, featuring, and organisation don’t influence the market at all, making for a truly free market.
2. Fix the App Store like a LOT of developers have been politely requesting since last year! I’m not buying the “App Store is new” argument anymore, it’s not. Apple have the resources to be able to make the most important changes needed in a matter of weeks, what they lack is the will and direction to do so.
I’ve lost all hope that the App Store will actually see the real changes is needs. As it stands it’s poorly planned, poorly managed, poorly executed, and it’s an embarrassment to Apple. They should be ashamed to be associated with it.
As with many other serious iPhone developers recently, we’ve made the hard decision to kill all but one project in progress, and stop investing any resources in creating new applications. We’ll continue to sell and fully support our existing iPhone offerings, however we’re already moving to platforms which show signs of real viability.
It’s a shame, the iPhone showed so much promise, it’s such a fun technical platform to develop for, but Apple have simply setup a market in a way which kills real businesses.