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It may well be a usability problem - the app does what it says on the tin, but the user can't figure out how. In my experience the usual meaning of "It won't do x" is in fact "I know it does x, but I can't figure out how to make it". Rightly so in my opinion - I think it's part of the great cultural divide in computing, where developers see software as a toolkit but users expect appliances.

Marco also notes that the app has to contend with the user's expectation of what it should do. Which might not have any basis in reality. If an app doesn't do what a user expects, regardless of where that expectation originates, it earns the 'useless' designation.

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