Should Apple Give a Rat's Ass that Developers Aren't Getting Rich off of the iPhone Platform?

By Mark Sigal
October 7, 2009 | Comments: 11

apple-with-worms.pngIn the Newsweek article, 'Striking It Rich: Is There An App For That?' Tony Dokoupil contemplates the many entrepreneurs rushing to create programs for Apple's App Store, who despite seeking fortune and fame, are finding the task pretty hard.

On the one hand, it is humorous to listen to the woes of 'aspiring' millionaires quibble that:

  1. There is no free lunch;
  2. It takes time, resources and repeated success to build sustainable wealth in the App Store model;
  3. Apple makes the approval process "hard," despite the fact that 85K apps have gotten through in 18 months.
On the other, there is a valid argument that Apple's push to drive volume and ubiquity via "cheap" comes at the potential cost of cultivating breakout, transformational apps that cost more, require a longer sales cycle, and thus, more evangelizing to find their beachhead.

Mind you, this is independent of the argument that Apple has democratized the process of app developers achieving global distribution/reach, and monetizing same vis-a-vis the iPhone Platform, which they have unquestionably done.

The argument here is that a successful platform is defined by its developers, and one reason that Microsoft (with an arguably inferior platform) thrived for so long; namely, that they could show (and showcase) an ecosystem of third party entrepreneurs getting VERY RICH off of it. This includes hardware OEMs, software developers, VARs, integrators, etc.

After all, nothing motivates like good, old-fashioned greed.

Netting it out: At some point, I believe that Apple will need to figure out the path to breakout success for third-party developers, as the "born-on" date for the many articles referencing Steve Demeter (of Trism), and his $250K windfall in two months, is pretty tired - yet there aren't obvious other breakout examples that come to mind.

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11 Comments

I never thought there was widespread money to be had in those apps, but boy, you hit on the right thing... then its nice.

In my small circle I know 6 different people working on developing apps. Guess if i had the know-how I would to haha

If you go into any business just to make money you will likely fail. Especially short term. Even Bill Gates, who is a money man as much as anyone, had a passionate interest in computer software from the very beginning. And Steve Jobs, who was the definitive Silicon Valley story of striking it rich before you're 25, is quite obviously deeply engaged in Apple products.

The reason Trism made a lot of money all at once was it was one of the very first iPhone games. Now you have to take a longer-term approach to get your money back, and you have to out-compete the existing apps.

However iPhone is just getting started. There will likely be devices with bigger screens running iPhone OS. There is custom development like the US Army has a sniper app they run on iPod touch (US Army owns more iPod touch than anyone else in the world.)

@Hamranhansenhansen, you are definitely right on the time horizon and the fact that Demeter/Trism benefited immensely by being one of the first featured apps/games.

Part of my question is philosophical; namely, does Apple ultimately get judged by whether some developers become reasonably big standalone businesses, or not, and at what point do developers' eyes start to wander if they hear about Company X developing for Android/Pre/Etc. that has made oodles of revenue off the platform?

I don't know the answer but in the platform oriented businesses I have been a part of (mostly startups), that was something we thought about a lot.

Thanks for the thoughtful comments, btw.

At this point the app store isn't a great place to get discovered. You need to market, which costs money, which means bigger organizations have an advantage and so on. There was really only a short window for the crazy money and easy advertising. Now it's just like everything else, but it's still rather interesting.

There's a wide-open ability to write apps for Windows, for Unix, for Android, for Pre, ... Each is a bit different: lots of entrenched Windows competitors for well-defined needs, vs nobody knowing whether Pre will be around in two years. But in each case, the opportunity to do well depends on a combo of knowing the market, knowing the competition, doing a fabulously good job at something you're passionate about, and being lucky.

Note: none of those depend on the notion of
1. Get brilliantly inspired by BSing over drinks with your buddies.
2. Dash off a couple thousand lines of code and some cute artwork.
3. Profit!!!

Markets mature. The App Store of a year from now will work quite a bit differently from how it did a year ago, when it was wide open, and developers' approaches will need to change, too.

Spend a few enjoyable minutes with the latest New Yorker article about Google: S&L refused their backers' requests to do banner ads heck, ANY way to make money, for —>2 years

Those for whom money is a Big Deal might think about how it happens in the real world. Blaming Apple for not giving them enough space is more appropriate to skid row.

There's a wide-open ability to write apps for Windows, for Unix, for Android, for Pre, ... Each is a bit different: lots of entrenched Windows competitors for well-defined needs, vs nobody knowing whether Pre will be around in two years. But in each case, the opportunity to do well depends on a combo of knowing the market, knowing the competition, doing a fabulously good job at something you're passionate about, and being lucky.

Note: none of those depend on the notion of
1. Get brilliantly inspired by BSing over drinks with your buddies.
2. Dash off a couple thousand lines of code and some cute artwork.
3. Profit!!!

Markets mature. The App Store of a year from now will work quite a bit differently from how it did a year ago, when it was wide open, and developers' approaches will need to change, too.

Spend a few enjoyable minutes with the latest New Yorker article about Google: S&L refused their backers' requests to do banner ads heck, ANY way to make money, for —>2 years

Those for whom money is a Big Deal might think about how it happens in the real world. Blaming Apple for not giving them enough space is more appropriate to skid row.

(4th para should have read: )

Spend a few enjoyable minutes with the latest New Yorker article about Google: S&L refused their backers' requests to do banner ads heck, ANY way to make money, for ***2 years*** because they wanted to get their product right, burning thru megabucks if necessary, before they worried about monetizing it.

I wonder if the real way of making money off iPhone applications is a VAR and OEM market.

I can imagine a company writing an application suite that installs on an iPhone (perhaps with a hardware add-on) that suits an integrated market such as hospital staff, your local mechanic, surveyors and such. I think that's what we will see over the next couple of years on the iPhone and iPod Touch.

// Tony

Whenever I have talked about writing Apps for the iPhone, I clearly said: "Don't quit your day jobs yet!"

I have worked as a Windows Developer, too, and I can not recall that Microsoft has made it any easier to "become rich" writing Windows Apps.

Apple has made it incredibly easy to write apps for the iPhone, but that does not automatically generate a lot of income.

It takes time, resources and repeated success to build sustainable wealth with software on ANY platform. A lot of people in the iPhone world seem to be completely ignorant about that fact.

@Walt, parsing through your comments, I am not totally sure what the net out of your point is. That the market is wide-open? That it is evolving? That the questions raised by my post aren't a big deal? I agree that random whining by developers is silly but that is independent of my thesis that Apple needs (some subset of) developers to be financially successful.

@Tony, that is my belief; namely, that VARs/OEMs are a separate channel that Apple should formally cultivate, create marketing programs for, and grow in a less scattershot fashion than App Store, which is fundamentally more about satisfying the "there's an app for that" meme.

@Alexander, thanks for the counter-perspective on being a Windows Developer, and grass not necessarily being greener.

The app market is very thin, just compare your ranking deltas to your trade volumes

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