

Apple Doesn't Want Your iPhone App to Make Money - stanleydrew
http://hellosorld.com/tech/2010/04/16/apple-doesnt-want-your-iphone-app-to-make-money.html

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rauljara
And yet, apple has taken concrete steps to try to encourage more high quality
(i.e. pricier) apps, including adding the "top grossing category" to the app
store.

The post also fails to give any examples whatsoever of how apple is actively
encouraging the cheap/free apps. One might argue that they kind of discourage
it by charging the $99 fee to join the program that lets you post apps. Apple
makes it so that it costs you money to give away your programs.

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commieneko
At most, the only case made here is that Apple doesn't care one way or the
other if you make any money selling your app; as long as apps are there and
people are using them, Apple is happy.

The apps are a marketing tool for Apple. While they make some money reselling
them, I can't imagine it's enough to get stockholders excited. All the sound
and fury regarding app rejections and keeping the riffraff (Flash) out has
more to do with brand management than technology or protectionism (not that
Apple isn't protectionist...)

~~~
richardw
They're not just a marketing tool - they're also a switching cost. When you
buy a new phone you have to consider which apps you'll have to replace, and
which data you might need to move across. Less so than a large iTunes music
collection, but still.

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SlyShy
Maybe, if Apple weren't collecting a commission on app sales. The brilliant
thing is, whatever app hits the price point that maximizes profit * quantity,
Apple collects the commission. Apple doesn't have that much motivation to
artificially lower prices, if they just let the market go to work the market
will maximize profits for them.

That's not to mention that the cost of apps is so low compared to the
expensive iPhone/iPad that they are already effectively commodities. Unless
you see a lot of $30 apps running around, which I don't.

~~~
stanleydrew
_Unless you see a lot of $30 apps running around, which I don't._

Right, but that's kind of the point. Apple has already commoditized the app
market. Some apps cost a lot in terms of developer time, but you can't
realistically charge more than $5 per app. I think there's still room for
prices to sink lower though.

~~~
KirinDave
It'd be the point if people weren't already making a lot of money at the 99c
and sub-$5 price points. But they are. Apple indeed encouraged cheap apps on
the iPhone, but the market didn't really suffer.

~~~
stanleydrew
See here: <http://www.newsweek.com/id/216788/output/print>

~~~
KirinDave
I'm not sure what your point is.

People can make a living off the app store. A handful of people get very rich,
and many don't. It's not different from _any other market_.

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mattmaroon
"The conventional wisdom is that a lot of people are making a lot of money
selling apps in the App Store."

That's not true in the professional app developer community. Hobbyists can
make golf-money on the app store, and of course everyone likes to point out
the few runaway success apps, but anyone professionally making games, for
instance, knows that the business case for iPhone development is weak if
you're not one of the really big guys like EA.

Indie game devs are far more interested in Facebook. Mobile is still more work
for less pay and everyone seriously playing in the space knows it.

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gte910h
I don't think the author of this blog post supports his argument well enough.
I don't personally see a conspiracy from Apple to make free succeed.

~~~
stanleydrew
I don't think there's a conspiracy either. I'm only suggesting that Apple
would rather your app cost $1.99 than $19.99, and that they have an incentive
to make you believe you can make a lot of money even when the App Store is
quickly becoming a race to the bottom.

~~~
allwein
I'd actually argue the complete opposite, that the race to the bottom has come
and gone. You can't go any lower than $0.99 and free, and we hit those points
a long time ago.

This next bit is anecdotal. There's so much shovelware and apps without polish
on the app store, and many of them typically reflect this free and $0.99 price
point. I'm starting to see trends of quality apps that originally priced at
$0.99 to compete, changing their price points to $2.99 or $4.99 because
compared to the competition, they're apps are of a premium and well-maintained
quality.

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neonfunk
There were several free apps in the top-grossing list last time I checked. And
I think ad profits are worth mentioning. iAd is a pretty significant
investment on Apple's part... not that they aren't hoping to profit from it --
but the more devs profit, the more they profit -- I think that's the real
point. To say they "don't want" devs to profit confuses me.

~~~
patio11
_but the more devs profit, the more they profit_

The average App Store customer buys less than $20 worth of apps last time I
saw numbers quoted. 30% of $20 is $6. Apple is a hardware manufacturer that
sells $X00 phones at one of the highest markups in the industry and also gets
a kickback from AT&T for every customer they bring to monthly billing.

Apples' incentives are almost totally non-related to developers' incentives:
their primary interest in apps is to move more hardware and contracts.

~~~
neonfunk
You're right, I don't think apple is that interested in devs' profitability,
or for that matter, app store profits. But I also don't think they have any
incentive to actively harm devs' chances of being successful... It's the
"don't want them to profit" part that I can't understand. Maybe "don't
care"... But "don't want"?

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chc
As with so many articles about Apple, this post completely ignores the issue
of quality. If you assume that Apple would just as a soon have a bad app as a
good one, then sure, this argument makes sense. But I don't think most people
would make that argument, especially people who know Apple. It's not in
Apple's interests to have lots of nonprofitable apps because developers have
little incentive to support those.

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melvinram
Where is the evidence? People like to make random statements a lot now days.

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ZachPruckowski
Apple encourages two App business plans. They encourage high-volume cheap/ad-
based apps, and expensive niche apps. Either of those can be profitable, but
nobody's going to sell a $10+ App to an appreciable fraction of
iPhone/iTouch/iPad users.

The high-volume cheap apps (free to $10) are for the general public, and in
that area, the blog post is correct - Apple is mostly interested in
competition resulting in cheap and good general-interest apps, because it
enhances "there's an App for that".

If you want to sell a $50+ iPhone app, you need to look at niche fields.
There's a bar exam prep app for $1000[1], and one of the apps demo'd before
the App store launch. In general, the really expensive iPhone apps add a
killer-app feature - a feature that justifies buying the iPhone itself. Like
the "check your security cameras while patrolling"[2] app, or the "every
medical and pharmacological reference ever written in the palm of your hand
and instantly searchable" app (#8 on the list in [2]) or the "control your
multi-thousand-dollar home automation system" app from ROSIE[3]. These types
of Apps literally sell iPhones by themselves. I mean, the tuning forks you
need to tune a high-end piano cost $450[4], so a $300 app which is a million
times easier to use is a no-brainer if you're a piano repairman or performer.

[1] - [http://www.edibleapple.com/bar-exam-preparation-app-for-
the-...](http://www.edibleapple.com/bar-exam-preparation-app-for-the-iphone-
now-available-for-1000/) [2] - [http://www.businessinsider.com/the-10-most-
expensive-iphone-...](http://www.businessinsider.com/the-10-most-expensive-
iphone-apps-2009-8) [3] - [http://www.businessinsider.com/most-expensive-
iphone-apps-20...](http://www.businessinsider.com/most-expensive-iphone-
apps-2010-1#8-rosie-home-automation-19999-tie-2) [4] -
[http://www.mypianoshop.com/store/product.php?productid=16630...](http://www.mypianoshop.com/store/product.php?productid=16630&cat=42&page=1)

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colinplamondon
Right! This is why the iPhone App Store defaults to the Free section of each
category, massively reducing potential Paid sales.

Oh. Wait...

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LiveTheDream
I disagree with this premise. Apple makes money from App Store sales ($27M to
$170M per quarter according to various estimates found on Google) which, while
small compared to total revenue, is non-trivial. Also, paid apps tend to be
higher quality, and it is strongly in Apple's best interest to maintain a high
quality standard in the App Store. If Apple suddenly makes it hard for
developers to make money, as the article insinuates, then they will deal with
a larger percentage of low quality app submissions because it isn't worth the
time to make high-end apps.

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fonosip
free is actually a problem for apple, as the money goes directly to the
developer/google for the banners. no cut for apple

hence. iAds

but they face an uphill battle against the monetization of mobile adsense

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stcredzero
But they would want your free App's _ads_ to make money.

