Gizmodo: App Store Economy a Road to Oblivion?


Gizmodo has an interesting post up on Apple's iPhone App Store, and how it might be headed straight down the road to oblivion. Their basic take is that downward price pressure, users conditioned by iTunes to expect $1 songs and $2 TV shows, Apple recommending (and wanting) cheaper prices, high development costs with low chances for visibility, all combine to put iPhone (and iPod touch) development on the endangered species list. Further, yesterday's announcement of in-app purchase for free apps, they argue, makes things like the Top Lists nebulous going forward.

And it doesn't just apply to the iPhone:

don't forget, Palm and Android fans, this App Store Effect sends ripples well beyond the App Store. Customers expect to see functionally identical apps priced the same way across platforms, because to us, that's what makes sense. Can devs really afford to port an app to the webOS to sell to the tens of thousands of Pre owners, when they're expected to tag it with iPhone prices, calculated for a base of millions? Whether by Apple's design or totally by accident, everyone who doesn't own an iPhone will suffer for it.

Some would argue the market can correct for anything. If premium developers leave in frustration, users will tire of CrApps, a premium developer will sense the voice, fill it, make a killing, and other premium developers will flock back. Others believe Apple controls the market and so it's their job to make it as good a market for developers -- and ultimately users -- as possible through proper policies and procedures (BlackBerry, for example, won't allow paid apps under $2.99 into the App World).

We've all discussed this a lot in the past, and no doubt will continue to discuss it moving forward, but give Giz's article a read and let us know what you think.

Have something to say about this story? Leave a comment! Need help with something else? Ask in our forums!

Rene Ritchie

EiC of iMore, EP of Mobile Nations, Apple analyst, co-host of Debug, Iterate, Vector, Review, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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Reader comments

Gizmodo: App Store Economy a Road to Oblivion?


I think the apps are more appropriately priced on the iphone.. yes, I realize that a lot of work goes into some of these apps.. and I don't have a problem paying for that work.. my point is.. raise the prices for something like tetris, and half the buyers will buy it.. I'm willing to bet that copilot at $35 has made more on iphone then at the $200 price point on winmo.. Digital downloads can be at cheaper prices, as long as they have the large community to back them.. there really isn't a cost for the product other then labor.. (things like dvd's, packaging, and entire gps devices aren't needed when you get something digitally.. so you're dropping the cost of creation significantly)

Most of the apps for the iphone are CRAP ! up the price point maybe we will see some decent stuff come in.

Dear TiPB,
Stop posting about how the iPhone's app economy is a giant whole in the neter-regions of some 7th layer universe. We get it. We're a bunch of cheapskates.
Although, it was interesting to see a comparison to other online app stores for once. But you have to ask how many craptastic apps are on the newly formed app stores?
I think that one of the main reasons our app store is the Wal-Mart of app stores is because too many people have spent higher prices on an app that just plain sucks. We'd rather lose a dollar on a bad app then lose 10 bucks on a bad app. And if the app just so happens to be really awesome and was only a dollar, "HEY!, I just found a bargain!"....

While it seems that the original apps concepts have been turned on their head I doubt that there is no plan. First, there is still going to be growth in this platform. I was in Singapore recently and found that the iPhone has a huge following in that country. However, it is a market like the US where there is only one carrier selling it. As Apple signs more non-exclusive carrier agreements there will be more growth and more opportunities for developers to sell.
Knowing this, Apple is not going to be stagnant in how they market apps or let developers market them. While the App Store will be the only avenue to sell I trust that there will be more ways to get apps recognized in the future.
Finally, the less Apple does the more that they and the developers rely on The iPhone Blog.

@d.allen - I would agree. Why would anyone pay $200 for CoPilot? The $35 iPhone version isn't even that good.
There is still power in volume. I haven't seen any stats on Tweetie 2, but I bet the developer has done just fine at $3 a pop.

This is exactly what made the App Store a Success, the Prices, When I had my Blackberry's I never bought those games because I felt they were overprice, but is not the same with app store over $$$$$$$500.00 in apps please don't tell my wife LOL.

I'm telling. lol. I can second that comment as well.. I have about 80 apps total.. never had one on other phones in the past.

all people complaining iphone apps being too cheap are fucking retarded. newsflash: how much money a dev makes is not determined by the app price, but by the app price TIMES volume!! what would you rather have - an app that sells 1000x for 10$ on S60 or WinMo, or an app for 1.99$ that sells 100'000x on iphone? seriously.. can't hear this anymore.

@ nondual
i totally agree with you. The lower the price the higher the quantity demanded. We should also remember that its the iphone app store that made most apps popular on mobile phones. I have both iphone and blackberry but i will never buy an app on Blackberry whereas i have spent over £100 on iphone apps.

Sounds like the guys at Gizmodo should have paid attention during the price elasticity lecture in econ 101.

Gizmondo is right. The iPhone app store truly is saturated with too many thousands of apps, too much competition! Developers are in the business of making PROFIT not selling apps at dirt cheap dollar prices!
Someone mentioned multiplying those dollars by x100,000. This is nothing more than multi-level marketing mentality schemes - it doesn't happen like that in the real world. As if my apps (or your apps) are always at the top of the list so consumers can see and buy my apps first.
The logic is simple. If you don't feel you're getting the profit your effort should be earning in 1 month or 2, don't listen to these recruiters. Simply and slowly consider cloning your apps onto other platforms and make a real assesement rather than following some of the mind-controlling opinions here that can ruin your business and waste your time.
You're not leaving the app store, you're simply exploring other opportunities: Palm Pre, Android, WinMobile...whatever. It's in the best interest of YOUR business not consumers, that count the most.

I've spent hundreds on apps on the iphone, I'd spent under $20 total on all phones before hand.
Pricing is a big part of that.

Apple HAS been making improvements to the app store. S.l.o.w.l.y. But there's no way they don't have someone working on app discoverability. Problem is, I haven't read any good solutions either. Genius for the app store is the better than anything I've seen anybody come up with.
Maybe an app store variation of genius mixes? Instead of an app being recommended based off of ONE app, it can take more of your buying habits into account. Make it easier to rate an app without deleting it and they could throw those ratings into the equation.
Keep saved app data after a clean install and more people would be willing to make purchases for the long run. I gotten pretty far with enigmo, fieldrunners, super monkey ball, south park, Rolando, etc, etc. But then a botched upgrade forces me to restore as a new phone (when even restore from backup fails) and it's all gone. I just can't bring myself to start over knowing that the next upgrade might do the same. Not just games either. Bento had some good lists going, Groceries had items and isles all customized, i.TV had favorited shows, Disc Golf had scores saved, and don't even talk to me about todo lists. Where's the incentive to buy these apps if I can't trust this stuff to be there? Some apps let you email or cloud sync your data for backup, but not many. But if they all did then that would become a huge task to keep up with.
But problems aside, I'd be interested to see some actual sales numbers between different platforms to see how they really compare. Do they justify articles like this one or is this just scaring away good developers for no real reason?

@ gizmoview
The App store is a free market( Competitive), and not a oligopoly or monopoly. The idea of allowing just few developers to produce apps is wrong and deos not benefit consumers.Well,develops cannot make apps and then buy it themselves so as to make profits; CONSUMERS DO,therefore,without consumers,NO MONEY. Trust,Consumers will survive with APPS on App store but will Developers survive?

The iphone app store is like walmart in terms of pricing strategy. They sell the same item as everyone just for less money but make it up in the volume they sell it in.
Example, you sell apples at .25 cents each and you sell 100 for the day you make $25 but I sell them for .15 cents each and sell 250 for the day I made $37.50.

Before the app store and iPhone I never even considered buying apps for a phone. Too expensive, not necessarily as productive as computer apps...I just couldn't really see the point. And now? Well my bank account would certainly agree that the app store isn't a good thing. But I just try and remind it what I've got for that money. Sure there's some shit. But there's a lot to like as well.

This is why I don't do web design very much anymore.....everybody wanted an awesome web site with all the bells and whistles for $200.00....
I don't haggle....
iPhone devs don't need to lower their prices.....
And porting for other platforms is a hassle and devs should charge more....