The Economics of Developing iPhone Apps

Sensei has an iPhone and it is indeed a great technological achievement.  It just works.  Another attractive aspect to the iPhone is the lowe priced software available from the App Store.  We have all heard of the stories of the kid who made $40K by creating an app and selling it.   At Coding Horror, Jeff Atwood posted his thoughts regarding the effect of lowering the cost of a software product and how that can create a jump in sales.  In short, the lower priced software makes up for the loss with volume.  

There are other considerations to be kept in mind before diverting your talent to iPhone application development.  The economics of surviving in that envirnoment are hazardous.  There is clearly great potential here, and if Apple can come up with multi-threaded application support in the iPhone OS mashup apps that use 3rd party tools such as Google apps can truly flourish.  As it stands today, the AT&T Apple alliance has rejected the Google platform for a mashup / web app.  You can’t use the Google geo-location unless you switch to the Safari browser.  But what happens if you get a phone call?  You have to switch apps.  To get the great functionality of the iPhone you’ll need to development in the iPhone / CoCo platform.

This is fine, but now you will be competing in terms dictated by Apple, and you will need to game the system to get your app in the Top 100, which means price will be a factor.  A big factor if you are competing against a 12 year old whose parents are feeding her or him and you are trying to launch a startup and feed a family yourself.  Factor in as well that there are times that apps have been excluded from the App Store when they were deemed direct competitors to current iPhone apps.

So, if you play nice with the Apple ecosystem and provide an app that is not at odds with the existing offering, and you price the app low enough, you’ll have a big hit.  But you run the risk of excluding the great functionality that a mashup can provide, as well as cutting yourself off from the productivity that you can gain inherent in mashups.  Take for instance Remember the Milk.  This simple tagging system that provides you notes and to do lists is great, but there are some clunky aspects to it.  If you are surfing and want to tag a web page ala Google Notebook style, you have send it to an email account that will bounce to RTM.  These are extra steps that interrupt your flow.  You have to wait for the email to process, then for your app to synch on your iPhone, then you can go in an finish tagging the item you just sent.  It’s clunky.  Great functionality is available on the Safari browser, but how do you bridge the gap between the web app and the true iPhone interface?

One thought, and it’s not quite “jelled” in Sensei’s mind yet, is that you build the mashup first, create your pricing model to feed yourself, and finally offer an iPhone app as a loss lead.  The question still remains if you can ceate a good iPhone app and capture the great functionality you can provide with a mashup.  Without mult-tasking.