Trip Hawkins Bags on Apple Gaming, Thinks Browser

| News

Trip Hawkins, former Apple marketing exec and legendary founder of Electronic Arts, is tense with Apple’s App Store, and encouraged game developers to think about the Web browser for future games. Mr. Hawkins, who has in the past praised the iPhone itself (and the App Store by extension) as a “spectacularly pleasant surprise,” lashed out against both Apple and Nintendo for their (unrelated) practices.

Mr. Hawkins’s problem with Apple today is that the App Store is overcrowded. According to CNN, the gaming exec said at the Game Developer Conference last week that “[Apple has] over-encouraged supply,” and that Apple has only crated the illusion of a viable business model for game developers.

Digital Chocolate CEO Trip Hawkins

Trip Hawkins, former Apple Exec, Founder of EA, Digital Chocolate CEO

Looking at Apple’s own numbers, Mr. Hawkins pointed to the (more or less) $4,000 per paid application that Apple has paid out on average to developers of apps on its App Store.

“Four thousand per application: Do you see a problem with that?” CNN reported he asked the audience at a panel on game development at the GDC. “That doesn’t even pay for a really good foosball table.”

He added, “If we can’t figure out how to make it a healthy ecosystem, it’s not going to be a great business for developers to be able to remain employed in.”

He didn’t specify what had changed since 2009 when he was more upbeat about the iPhone and the App Store, but since 2009, Apple has approved more than 250,000 more apps for the App Store.

Back in 2009, his current company, Digital Chocolate, had four #1 gaming titles and five of the top grossing games. Today, he said, the overcrowding in the App Store has made it hard for games to get noticed and become popular.

Mr. Hawkins also laid into Nintendo for changing the very economics of the gaming industry in the first place by instituting licensing fees for the privilege of making games for its consoles. Nintendo was the first to do so, and the model was quickly adopted by Sony, Microsoft, and others.

“We used to have a free and open game business,” Mr. Hawkins said. “And then Nintendo came along and introduced a thing called a licensing agreement.”

Of course, as ConsoleDigest pointed out, back when “we used to have a free and open game business,” which is the 1980s and early 1990s, console makers like Atari and Mr. Hawkins’ own company, 3DO, couldn’t make any money.

The licensing system started by Nintendo (and adopted by others) had the effect of locking out small development studios (that couldn’t afford the fees), but it allowed the console maker to offer hardware at a lower cost and to have a degree of control over game quality.

Today, Apple’s fees don’t come in the form of large per-title licensing fees, but rather in the form of a US$99 per year developer agreement and 30% of the take from its App Store. Apple’s control over its platform eclipses even Nintendo’s or Microsoft’s, which itself carries both benefits and detriments to consumers (depending on who they are and what they want).

Still, Nintendo offers one benefit that Apple doesn’t, according to Mr. Hawkins, who said, “At least Nintendo had the courtesy to tell you up-front that you were going to be screwed.”

From “spectacularly pleasant surprise” to “screwed” in less than two years.

Sign Up for the Newsletter

Join the TMO Express Daily Newsletter to get the latest Mac headlines in your e-mail every weekday.

Comments

hangtown

Trip Hawkins sounds like a grumpy old man yelling “get off my lawn!” I’d like to take him seriously on this issue, but I really can’t.

The app store has been the most successful single software platform I can recall, ever. It has an ease of use for customers and a built-in customer base for programmers that nothing else has ever matched.

There definitely are negatives to the app store, but being screwed by default isn’t one of them. Trip is tripping.

CommonMan

Sorry, have to disagree with hangtown.

The app store has been the most successful single software platform I can recall, ever. It has an ease of use for customers and a built-in customer base for programmers that nothing else has ever matched.

This is the Apple party line but this isn’t inconsistent with what Trip is saying.

The reality is that the App Store is a casino game where it is easy for anyone to come and play the slot game. Most people lose money (developers in this case with lost time and opportunity). But a very small percentage make it very big, much more than they might have ever done without such a platform. And like a Casino, the House (Apple) wins regardless of what happens to each individual player.

So it could be the most successful in terms of number of developers and number of apps but still have most developers losing. The question then becomes what is your chance of winning in this casino? The odds, I am afraid are very small for an individual developer. But the casino mentality is what draws them in rather than the rationality Trip is suggesting.

Bosco (Brad Hutchings)

Well, this is a tough one. On one hand, he’s right about platform vendors restricting access to the development kits and controlling the stores. Angry Birds certainly would not have happened on Nintendo, PlayStation, or XBox, even if they had touch controls. On the other hand, he’s frustrated that there’s no way to get attention in a store with 250,000 apps. True. How doesn’t it become a political game with a few big winners and most treading water when there is a choke point like that?

Kinda funny that he came up with an average number per app about 1/2 what I calculated when Apple announced its $1.7B app revenue year. I bet he’s tossing the high grossing outliers to get that figure. Does that change the evaluation for anyone about whether the Apple model of a controlled store is really worth it for commercial developers?

hangtown

Well, to answer both CommonMan and Bosco:

I’d wager that the app store has been at least as successful for developers as for them to develop their software outside of the store, and host their own downloads, etc. The app developers who have a good quality product and didn’t let the race to the bottom in app pricing pull them down are probably doing better than they would otherwise.

As for the question of a controlled store being worth it or not, contrast it to the Android store where almost no one is making money. Or contrast it to being an independent developer doing all your own hosting and bandwidth for downloads, etc.

If you think that selling software outside the app store is automatically going to be more profitable, excuse me while I have a good laugh at your expense.

CommonMan

If you think that selling software outside the app store is automatically going to be more profitable, excuse me while I have a good laugh at your expense.

You are missing the point by setting up a false dichotomy. In the casino analogy, it is like asking whether people are worse off playing in outside street betting games instead of going to a casino and so isn’t the casino better for them? The answer is doing neither. Developers shouldn’t be betting inside or out.

When I hear developers quitting jobs to start writing iPhone games (after all, they only have to get their app to a million users and they make it big), that is the “illusion of a viable business model”.

So the alternative for developers is to write to platforms where there is pricing ability (without an over-supply) and there is no expectation of free upgrades for life. Traditional gaming boxes still have this (at least until Apple manages to kill it off).

The problem with the App Store design as it becomes evident to developers soon is that it is designed for making very few win big and most lose and this is the “illusion of a viable business model” that most don’t realize when they get in. Part of the problem is the over supply.

App Store can be a viable model if you develop throw-away games that you can put together in 2-3 weeks and do a lot of it but most still cannot make it into a regular job. The outliers skew the averages and so the situation is actually worse than what those numbers indicate. Bosco, Trip would actually be kinder to the developers to remove the outliers, adding them only increases the illusion for the average developer.

The other problem is that all upgrades are expected to be free. As long as the market share of iDevices is increasing, a developer may get continued sales but once it saturates (and it will one day because it cannot keep going up), then either you abandon your game (and many will) or you figure out how to ask people for money with every upgrade (so you have some motivation to make it better). This is not a healthy eco-system.

A preview of the above can be seen in iPad apps sales this week if you have access to sales data. It has been an almost dead week for such apps as the sales of iPads have plunged until iPad 2 comes out next week. You have to depend on new iPad owners to pick up sales for the apps again. When market share saturates, that will become the norm.

This casino mentality will reign until the market share tapers off because everyone thinks they are going to win the slot machine next.

Ion_Quest

The iOS App Store has been a money losing waste of time for the average developer.  iPhone saturated.  iPad becoming so.  Race to the bottom pricing.

Best chance is to jump on a new gadget within 3 months of launch.  Of course you have to pick a winner.  Plus, use tools which are cross-platform—not Apple only.

rabber

This is a very interesting discussion. First of all, I think the main point that Trip makes (or should have made) is that it doesn?t matter whether the iOS platform is closed or open - there are too many games for any one to easily stand out and make money. Apple is encouraging as many developers as possible to create games for the iOS system and therefore there are too many. His proposed solution is for Apple to restrict the number of games so that there is less competition and it will be easier for the chosen develops to make money.

If this is the solution, then heaven help us. Why should Apple choose who gets to play in their ecosystem? I have no problem with them controlling the ecosystem and setting rules for everyone to abide by, but I do not want them picking ?winners?.

If I were a musician and recorded my music to sell, what allows me to stand out from the multitude of other bands? Marketing!!! If a developer wants to stand out from others he/she needs to market their product. This can take many different forms, but it would include promotional activities, advertising, etc.

If you develop a game for the iOS store, put it out and wait for the money to roll in, you deserve to get fleeced. I am not saying that you can market your product to the top, but it sure does increase your chances.

laughable

For years the “Games Industry” sniggered at Apple and gave us very poor ports of only their most profitable games, now they cry cause they have to compete in an (almost) open market, and they can’t make the big bucks.

I say good luck to all the new developers out there giving it a go!

Tiger

So, how do these developers differentiate themselves and get people to notice them before gaming becomes obsolete due to boredom?

1. Advertising
2. Viral campaigns

In other words, they’re gonna have to do a little work to get their product known among 250,000 out there. Just ask any candy manufacturer…it’s hard work and costs money! Just because there is a new exclusive store targeting customers, doesn’t mean you don’t have to market your product. Now, they’re gonna have to market it even more to let the customer know that they have a product worth even previewing, much less buying.

Bosco (Brad Hutchings)

As for the question of a controlled store being worth it or not, contrast it to the Android store where almost no one is making money. Or contrast it to being an independent developer doing all your own hosting and bandwidth for downloads, etc.

If you think that selling software outside the app store is automatically going to be more profitable, excuse me while I have a good laugh at your expense.

You go ahead and laugh. I’ll give you two figures to ponder. For a software business that did $500K revenues reliably last decade, had tens of thousands of downloads with each release or update, and hosted about 100 picture-heavy websites for customers, we spent about $300/year on the hosting we used.

And another figure for you… With one of my current products, we’ve made far more on after-sale consulting, customization, and training than on license sales. That happens because we pro-actively engage our customers. App stores that separate developers and customers make that model infeasible.

Perhaps on iOS, App Store sales will remain “relevant” because that’s the only path for developers on the platform. On Android, there are other paths and competing stores, which makes other revenue models possible. Mix in Flash for Android, PlayBook, and webOS, and there are even more options for revenues that aren’t captured by the platform vendor or easily measured by scorekeepers.

CommonMan

His proposed solution is for Apple to restrict the number of games so that there is less competition and it will be easier for the chosen develops to make money.

This is not what he has said. You are putting words in his mouth.

It is in Apple’s interest to encourage a casino mentality because that makes a lot of people addicted to creating new things and play the slot game. It keeps the App Store constantly changing and titles increasing which plays into their buzz campaigns.

But that is not in the best interests of the developer community, just as Casinos are not in the best interests of the gambling population even if a few of them make far more money than they could have otherwise.

Apple is not likely to change this at all. But if they were to do so, then several things can be changed without trying to restrict.

For example, they could create tiers of classifications (the metric could just be price tiers at the minimum) so that more deeper games could be sold at higher prices without getting swamped by “fart” apps. They could fix the rating and comments systems so that developers can have a relationship with the customer rather than encourage the gaming of the reviews and ratings that happen today (despite Apple’s public stance on this, there is hardly any enforcement to back it up). They could allow for upgrade pricing rather than people creating new titles each time they do a significant update which will reduce the number of titles and create app kitchen sink. They could set up a system for customers and developers to talk together even if kept anonymous by embedding a support room for each title.

These are just a few examples of a zillion things Apple could do if they actually wanted to encourage quality over quantity but there is sheer hypocrisy between what they say they want and what they encourage with their policies - from approval process to listing and reviewing. As I said before, it is in Apple’s interests to maintain a casino game mentality to keep developers busy in their ecosystem to promote an all or nothing reward structure. This is one of the reasons why Apple is Winning over Google in the App Store.

And yes, you have to do significant marketing outside of the App Store (and not to mention gaming the ratings and listings and getting friends inside Apple, becoming preferred vendors, etc) to make it into a success but with their public policies and statements, Apple has maintained an illusion of meritocracy (do a good app and you will win) which leads to more developers playing the slot machine with terrible odds.

When you have an App Store that encourages quality with a number of things as suggested above, then the quantity tends to decrease not because of any restrictions but customers are better able to find high-quality apps rather than be distracted with two-week hacks.

But the official position is like that lottery ad campaign “Imagine what a buck can do”. It is “Imagine what an app can do” by pointing to the Angry Birds. So you have a betting parlor which given human nature will be crowded. But it is an extremely exploitative system for the developer community in general.

Of course, developers have the ability to walk away and no one is holding a gun to their head just like casino gamblers but it doesn’t mean that casinos aren’t harmful for those that participate with the “illusion”.

dhp

I am not a developer, but I can easily see why there would be a few big winners and lots and lots of losers on the app store. I am probably a typical iOS app buyer; I just look at the App Store and see what is new, then look at the top-seller listings. Looking in the category listings is daunting to say the least. There is just so much crap to slog through to find anything worthwhile. So the apps that are popular remain popular because…they’re popular.

It’s funny to hear all the old Windows vs. Mac arguments (number of apps, market share) rehashed and reversed in favor of the iOS devices.

Dean Lewis

The arguments above all sound good, and I won’t argue that gaming the system doesn’t happen. However, some of the biggest apps got to where they were by simply marketing, getting word of mouth, and then getting press—good or bad.

Also, for all the maligning of fart apps, the truth is they (and a couple in particular) sold and made a ton of money. It’s not just the gaming/app world where this happens. Justin Bieber is making money hand over fist for himself and his handlers. The Jersey Shore is a huge money maker for its producers and its cast. We can go back through all the popular crap of the ages and decry that much more deserving stuff should have gotten the money and notice instead, but that’s not how the real world works. Meritocracy? Right. That rarely ever works out, especially these days when people increasingly demand something for nothing (or just outright pirate it—or in the case of the store I work at, steal it).

qualitywte

Sounds like Tim is just “tense” about the success of his former employer.  I think the app store has made it possible for some “little guys” to make it big.  Is he just complaining about Apple allowing everyone (not just EA or those with big money) to play on the same level field?

Ronin33

Wow!

So the genius behind the ill-conceived and money losing 3DO knows better than the geniuses behind Apple.

Sure.

zewazir

What those supporting the “casino” model complaint are failing to recognize is the sale of products is not random chance. If people like a game, they will buy it, play it, show it to others who will want it and also buy it.  If people do not like the game, even if they bought it in the first place, they will not play it or show it around, and sales will be correspondingly lower. Those who make it big do so because people like their product, not because luck landed on their number. It’s not some chance-based crap shoot as the “casino model” implies. It depends on the developers writing games which people will want to play. If they fail (and lots of decent ideas fail - that’s part of the developer’s world) then they use that experience to write a better game next time.

Apple’s model gives opportunity to more developers, part time developers, basement developers, etc. Where the traditional model vastly favored the big companies, the new model levels the playing field where big developer companies compete equally with the classic bespectacled basement nerd, and as often as not, the basement nerd comes out ahead, while the large company misses the mark, taking a loss on their developer’s wages against the sale of the game. And, sometimes it is the other way around, except the basement nerd loses nothing but the time and effort they put into writing the code for their game. How is this wrong?

aardman

Yup, Mr. Trip is complaining about there being too many game developers allowed into the iOS/App store ecosystem and too little in the Nintendo ecosystem.  His preference apparently is just enough to let his company in and no one else after that.  He doesn’t seem to realize how foolish and self-serving he sounds, pretending to be concerned about the ‘developers’ when his concern is really just one developer.

New industries or markets follow pretty much the same pattern, early on you get a lot of competitors entering the market leading to a glut of sellers, then the inevitable shakeout comes as the weaker operations drop out.  iOS just hasn’t gone through a shakeout.  One factor determining who gets shaken out is marketing.  You want to stay in the iOS ecosystem, you better stop relying on Apple or anyone else to market your product for you.

aardman

You go ahead and laugh. I?ll give you two figures to ponder. For a software business that did $500K revenues reliably last decade, had tens of thousands of downloads with each release or update, and hosted about 100 picture-heavy websites for customers, we spent about $300/year on the hosting we used.

And another figure for you? With one of my current products, we?ve made far more on after-sale consulting, customization, and training than on license sales. That happens because we pro-actively engage our customers. App stores that separate developers and customers make that model infeasible.

That is well and good.  But anecdotal evidence isn’t. (Evidence, that is.)  For every successful company like yours, the entrepreneurial graveyard is littered with probably ten times more corpses (hundreds in some industries) of companies that tried your approach and failed.  A sample size of one idiosyncratic experience is just not enough data to make a voice-of-god pronouncement about anything other than your own idiosyncratic experience.

If you really want to be the The Last Word on iOS, Apple, or anything for that matter, then gather some data, compile it, analyse it, then present your findings and conclusions for all to scrutinize. 

Until then, you’re just like the rest of us arm chair analysts spewing opinions based on casual observation of unverified ‘facts’.

Bosco (Brad Hutchings)

@zewazir: OK, let’s accept your premise that it’s not a crap-shoot and you can sell in this environment if you do the right things, and let’s accept Trip’s premise that the average paid app made $4000. And just for shigs and gittles, let’s say that an average paid app takes 3 man-months to develop. So the average developer could expect to make $16K writing apps full time. Let’s not forget McHale’s Law, which states that the average human being has one tit and one ball, so while this might be average, it might not actually be typical. In fact, there is likely a long tail distribution with a few big winners and most everyone else out on the tail.

OK, now that we have that… Let’s take a model game developer to emulate. Rovio has seen fantastic success with Angry Birds. Let’s dig into what they did and have all these average developers do the same thing… Make a wonderful, fun product with great characters, promote the hell out of it, go viral, etc. Is the end result that the average developer is now making $1M instead of $4K? Is the end result that the average developer is now making $8K instead of $4K?

I think it’s more likely that the pie is the size it is with the growth that it has due to user base growth or per-user spending growth, and that the pie might grow 100% year over year (very optimistic), but so might the app count, which would keep the average at bay. In fact, we’ve seen evidence divined from Apple’s App Store revenue numbers and app counts that this average has actually dropped 25% or so 2009 to 2010. What we have at best with the App Store is a zero sum game, probably a negative sum game.

And that’s really the most damning indictment of the centralized App Store I’ve come up with. It can only grow in predefined and controlled ways, rather than accidentally through unseen market process outside of Apple’s purview.

Explain to me how I’m wrong about this. grin

Bosco (Brad Hutchings)

If you really want to be the The Last Word on iOS, Apple, or anything for that matter, then gather some data, compile it, analyse it, then present your findings and conclusions for all to scrutinize.?

Until then, you?re just like the rest of us arm chair analysts spewing opinions based on casual observation of unverified ?facts?.

Why the hostility? Because I don’t see a “falate to 50 pounds” sticker on Apple? I share some of my experience here. When I speak with other developers, I suggest what has worked for me and listen to what has worked for them. Business, especially small and startup business is as far away from “science” as it can possibly be. I’ve seen that people who scrap are the ones who survive and thrive.

That said, if you want more numbers from me and analysis of those numbers, just read my previous post. Feel free to double or halve whichever numbers you like and plug them into my train of thought and see what it does to the general conclusion. I’m with CommonMan on this… App Store is a crap shoot for developers, bound by an effectively zero-sum or negative-sum game with a low expected value of payout (in a probabilistic sense). That does not mean it isn’t a wonderful experience for users or wildly profitable and effective for Apple. The first is a different argument entirely. The second really isn’t debatable.

CommonMan

What those supporting the ?casino? model complaint are failing to recognize is the sale of products is not random chance.

If you are a programmer or a statistician, you will know that there are many types of random series, some of which are repeatable. grin

But seriously, it is a casino game in the same sense people call day trading on Wall Street a casino game. There are always things you can do to improve your chances in a betting game (even as simple as buying more lottery tickets) but what is important is the odds of winning. So in the long-tailed model of success in the Apple App Store, any individual developer’s chances of winning are low enough to be random despite best efforts. Of course, it doesn’t mean nobody wins, some win big.

No one is really saying that it is necessarily wrong for developers to play this App Store game but the problem is in not doing so with knowledge and awareness. Developers play the App Store for the same reason people play the Casinos. A combination of poor appreciation of odds, a sense of having control when one doesn’t really exist (a curious human trait), a deeper weighting for the upside than the downside even if probabilistically it is much more unlikely, etc. Hence the “illusion”.

I hear this rationale that small developers are now in the same playing field as the big companies now. Atlantic City casinos run free buses from New York City. One could claim that this now puts the people who take the bus in the same level field as people who can afford to fly-in. Does it mean it increases their odds of winning or their odds of losing? grin

So where is the harm? If you assume that there are no excesses from the addiction (“just one more app and I will win”), there is a monetary cost to time spent as in opportunity costs, family time costs, managing one’s career costs, etc. As I said before, when I see people quit jobs or stop looking for jobs because they are going to make money in iPhone apps, I see the same souls who sit in front of the slot machines rather than have a regular job or look for one. The odds are so against them that this is an unfortunate decision. It may be their free will but it is an uninformed choice because of the lack of appreciation of statistical odds, the same way people play betting games or aspire to become basketball stars for their future.

I am not suggesting that developers shouldn’t attempt to play in the App Store, just that the current App Store exists with odds stacked highly against the developer and unfortunately people aren’t aware of it and Apple is not going to make them aware of it. On the contrary, it is in Apple’s interest to make everyone think they could have won.. just like casinos do.

The number that would really be eye-opening is the number of total uncompensated man hours spent developing for the App Store where the reward structure is such that most people face this loss while a very few get exorbitant money for the hours spent, so it becomes a zero-sum game at best. This is not a healthy ecosystem just as Casinos aren’t for people in general and cause more ill-effects than rewards.

When the market-share saturates, you will see the fall out.

I am always amused at how people in Casinos also believe that they have a system that will give them an edge to win, even the ones playing the slot machines. In games where people play against each other (a more appropriate analogy for the App Store), it is even stronger as most people believe they are better than average and so have better chance of winning, if only.

The App Store development also has very strong resemblance to the day-trading craze of the past decade when people quit their jobs to do day-trading, not realizing that in a rising market everyone looks like a genius, and it isn’t their particular skills that made them win some money (although people lost a lot of money even in rising markets because they though they had a brilliant idea). In the App Store, it is the rising market for SmartPhones that is keeping people going. But when that stops (market gets saturated or competitors as a whole start getting market shares), developers will realize their net losses so far.

The permanent side-effect might be that small developer shops (not greedy companies necessarily) which spent considerable amount of time perfecting games would likely be extinct in favor of casual throw-away games and everyone loses.

zewazir

I hear this rationale that small developers are now in the same playing field as the big companies now. Atlantic City casinos run free buses from New York City. One could claim that this now puts the people who take the bus in the same level field as people who can afford to fly-in. Does it mean it increases their odds of winning or their odds of losing?

Your “game” (gambling) analogy still does not hold water.

We are not talking about how people get to the gaming table. Odd in gaming are determined by the laws of physics and probability. Those ho can track those laws to one degree or another can increase their chances of winning, but winning is still based on chance.

The sale of a gaming application is NOT just a toss of the dice as your analogy demands. Successful applications (whether they are games or otherwise) are successful because they sell lots of copies. Adobe, Microsoft, Broderbund, etc. are successful software companies because they write and sell applications consumers want to purchase. The only thing Apple is doing with their app store is giving more people access to present their wares for sale.  It’s a virtual market square, NOT a casino.

People who depend on hitting the line bet 20 times in a row on the roulette table deserve what they get.

But good developers who write a good product are not depending on how the dice roll - they are depending on consumers liking their product. It’s capitalism wrought in a virtual market. And there is absolutely nothing wrong with that. People who put out products that sell well are not “wining” some game - they are successful at selling their product because they put out a product people like - and thus DESERVE to be successful.

It is not a fault of Apple’s design if people look at the App Store is some kind of get rich quick scheme. If people quit their jobs to become full time developers, but without the requisite skills to put out a viable product, or before they have a viable product ready for release, that is THEIR lookout. No market design is responsible for people’s poor choices. If they cannot (for a variety of reasons, from lack of coding skills to lack of adequate product research and everything in between) produce a viable product, they will not make any money for their efforts. But, again, that is not a fault in Apple’s design, it is the FACT that not all products sell well enough to make the producer/seller any money. Again, it is the way capitalism works. Good products yield successful results, poor products yield poor results. It’s not a matter of winning vs. losing in a gamble. It is a matter of deserved success for putting out a good product vs. lack of success for putting out a poor product.

The permanent side-effect might be that small developer shops (not greedy companies necessarily) which spent considerable amount of time perfecting games would likely be extinct in favor of casual throw-away games and everyone loses.

And how, exactly, does Apple’s App Store threaten small developer shops? If they have good products that people like to use, those products will sell, and the sellers will be successful. If it is a smart phone app they want to sell to iPhone users, they can add their app to the app store just like everyone else who wants to sell iPhone apps. If it is a good product, it will sell, and the company makes money.  If not, then they won’t.  It has nothing to do with apple’s design, it has to do with making good or poor products.  The only difference with Apple’s design is it takes little to no capital to give it a try, which yields a lot of people trying.

Bosco (Brad Hutchings)

And how, exactly, does Apple?s App Store threaten small developer shops? If they have good products that people like to use, those products will sell, and the sellers will be successful.

For one thing, Apple’s App Store only model and lack of customer information to the developer puts a large hurdle in front of significant revenue opportunities tied to customer relationships. These opportunities are much less serendipitous with Apple in the middle.

CommonMan

@zewazir, I am not sure if you have actual developing experience over some years because much of what you are saying is the theory, not the practice. So it comes out like people who try to justify that day-trading on skills and preparation. The reality is quite different on how good software comes about.

1. The ability of developers to do programs good or bad or to do effective marketing hasn’t changed much because of the App Store (other than the top 50 boost). What Apple did was to remove/lessen the logistics barriers for any independent developers to get to the marketplace, hence the comparison to the busing to the casino. That by itself doesn’t make them win, they could lose easily now while before they didn’t IF the odds of success were low to start with. So the net effect is that it is making more people lose now than before the App Store existed while it is making a very few people win big.

2. Funny you should mention those software companies because the App Store design will ensure that no such complex/useful programs will ever be written (although existing ones will be knocked off at $1 a copy for some developer that will reap the benefits and go away) for a number of reasons.

a. Such software doesn’t come about because someone got an idea one day and knocked it off in a few weeks. They require many staff-months of not staff-years. The lack of pricing power and the all or nothing market behavior means that creating such software is too risky to start on and encourages small throw-away efforts which is 99% of the current apps. Unless you have a market outside already (which is not the case for most independent developers)...

b. Good software evolves with user feedback, competition, etc., over time (of months if not years). Customer feedback is difficult with App Store design because Apple comes between the customer and the developer. Again because of the all or nothing with a few winners, apps cannot stay with a gradually improving profile where earlier sales help finance the improvements. Either you make it big with your first effort (in which case the motivation for improvement is much less) or it has very little sales (which demotivates improvements). The developer has very little idea if the idea itself is bad or if there were issues that could be fixed. The App Store design does not encourage customer/developer interactions to the level necessary to develop significant software that sustains over years and improves with effective feedback. This is the very kind of thing that removes the gambling aspect of it.

So the net result is superficial, throw-away software designed more for quick hits than any software like Adobe Photoshop that endures over time and provides significant benefits to all.

Meanwhile, you get most developers with a lot of throwaways who don’t get compensated for most of the hours.

The statement that if you do good programs with a great idea and market it well, it will do well is a cyclic and non-falsifiable statement because any program in retrospect that didn’t do well, didn’t have one of those things surely? The point really is that program on an App Store can fail for a number of reasons that has to do with the App Store design than the effort/idea.

We can split hairs about the semantics of gambling but if the odds of your app making it on introduction is 1% and your efforts to market it increases the odds to 2%, then you can call it anything you want as long as the reality is acknowledged.

What the App Store (and Facebook platform before it) encourages is experimentation with throw-away ideas with the hopes that one of them will stick and go viral and this self-selects for low-priced shallow efforts because you cannot get good initial adoption for any apps priced over $10 and there is only so much one is able to do on an app for that kind of pricing.

Combine that with the situation where the ease of development on the platform makes it possible for a large number of developers to do knock-offs as soon as somebody comes up with a great idea (or adopt most of the innovative features) and then play the App Store games to push their apps over yours, there is very little incentive to do anything but superficial set of features and wait for someone else to put in the effort that you can knock-off. That is the way capitalism works and copyrights don’t help much.

And that is what most developers who have been around for more than a few years or have developed significant programs see when they see the App Store.

Bosco (Brad Hutchings)

And that is what most developers who have been around for more than a few years or have developed significant programs see when they see the App Store.

Riffing off of this and a random thought… Did anyone notice that Apple essentially pulled a Google with the second half of the iPad 2 announcement? A month ago, Apple fans were mocking Google for hiring developers to create really nice Android apps. But what did Apple just do with iMovie and Garage Band for iPad? And then, what happens to competing apps either in the store already or under development? Those apps are absolute category killers not because they are excellent (which they seem to be) but because there’s no way any outside developer could get the buzz about a competing app or a more specific app that would garner the sales at those price points to even bother.

So there’s yet another risk of Apple’s exclusive channel. Apple itself might compete against you in its own store.

zewazir

You still act as if the “odds” of an app making it on introduction is like tossing dice. There is a 1% chance my app will make it, and certain things may increase that to a 2% chance.

Pasture patties. A good developer can increase those odds well above 2% by writing a really great application. Success of an application comes from people LIKING the application, not from random chance.

Do you think people who shop the App Store just randomly grab whatever catches their eye at the time? Perhaps a few do, but most people shopping for apps are looking for something - at least within a general idea, such as a shopping app, a game, a mapping app, a pizza-ordering app, etc.

People looking specifically for games also usually have a general idea what they want. A high-school boy isn’t going to be very impressed with a paper-doll app, whereas a preadolescent female iPod Touch owner may think a paper-doll app is the cat’s pajamas and ask daddy to buy it for her. As such, the sale of a particular app from the App store is not a simple matter of hit or miss. People go shopping, look around, find what they think may work, and try it out. If it doesn’t work well, they’ll come back for something better. If it does work, they’ll show it off, generating more business for the successful developer.

Your 1% figure comes from averaging the performance of apps (or did it come out of the thin air?), but does nothing to consider the quality of the apps, nor their ability to fit consumer desires. Again, you act like a successful app in the app store is little more than a lucky roll of the dice. If that were the case, then crap apps (of which there seems to be an abundance) have the same chance at making it big as well developed apps. Is that your claim?

And it’s a bit early to be claiming the app store does not encourage customer/developer interactions. In fact, there is a feedback system, is there not?

Plus, consumers have a tendency toward loyalty for things they like - and that includes application software - of all types. If I try a new DTP application and like it, chances are I’ll look to the same company (ie: developer) for other types of software I use.

The app store may be a little different, but if I find a rockin’ game app for my iPod Touch, I will be back looking for more by the same developer, in the same way I look for the same author when I find a book I really enjoy. If that means a software company instead of a basement developer, then I’ll be visiting the company’s website to see what they may have to offer that does not fit the App Store format.

I do not believe my online shopping habits are THAT unusual. Do you? The difference is the basement developer has a chance to get out there, get themselves known, and build from there - IF they have what it takes.  Some will simply grab what they can and run with it. (Their loss if they have the ability to grab a success in the first place) Others who succeed - even minimally - will take that success and build on it, offering more apps, making the successful one(s) better, offering new versions with new capabilities, expanding their trade.  Some will even end up starting their own software company on the capital gained from their App Store success, offering items on their own site that do not fit the App Store profile. Who knows, some bright mind(s) could end up a few years later offering that new DTP program that makes Adobe sit up and take notice.

Seems to me those developers who “have been around for more than a few years or have developed significant programs” view the App store the way they do because the threat of competition leaves them wondering if they have what it takes to keep up with the innovation inherent in thousands of people given the opportunity to jump in without the need for a significant capital investment. Guys (and gals) who came up through the ranks, “paying their dues”, as the saying goes, the “old fashioned” way. It’s normal to resent that there is now a (potential - for those who have what it takes) shortcut.

Bosco (Brad Hutchings)

Seems to me those developers who ?have been around for more than a few years or have developed significant programs? view the App store the way they do because the threat of competition leaves them wondering if they have what it takes to keep up with the innovation inherent in thousands of people given the opportunity to jump in without the need for a significant capital investment. Guys (and gals) who came up through the ranks, ?paying their dues?, as the saying goes, the ?old fashioned? way. It?s normal to resent that there is now a (potential - for those who have what it takes) shortcut.

What shoddy reasoning. Why does a discussion with Apple fans always turn into, if you’re not with Apple, you’re lazy? The skepticism about the App Store now follows from observable facts, not wild-ass conjecture about how crappy it will be for developers. Please tell me which facts you dispute:

1. The average payout per app per year is somewhere between $4K and $8K per year.
2. The distribution of payouts from App Store reflects a long tail distribution, with a few big winners and mostly not winners.
3. Even the silliest little paid app will take a very good developer two months to develop and get approved. This doesn’t include costs of artwork, etc. Nor does it include marketing effort outside the store.
4. Apple intermediates the transaction, denying developers access to customer information and feedback that they have in most other online sales channels.

Now, come up with a business model that is anything but “be on the tall side of the long tail”. Because with 30K or 40K developers, not every developer can do that. In fact, only a very few can do that.

CommonMan

If that were the case, then crap apps (of which there seems to be an abundance) have the same chance at making it big as well developed apps.

You got it! grin

Even the most cursory look at the top grossing lists on the App Store will show it for you.

Your last note sets the context finally, you are coming at it as an app user rather than a developer. If that is the case, then you don’t really have a clue of what is happening behind the scenes of apps that make it and apps that don’t and the customer behavior and the pricing issues. The games played on the reviews and ratings, in the pricing, the companies that have sprung up to improve your ratings, etc. What happens to your sales depending on the rankings and how you can improve the rankings with pricing manipulations, or switching between free and paid app lists, etc, etc. You don’t have a clue about what it takes to write throw-away software vs software that is non-trivial. Sorry, but you are way too naive about how the App Store works to discuss further with you.

Let us talk when new apps like Photoshop or Quicken or any apps that take months to years to develop come on the App Store and succeed. Or when no such new apps appear for years….

I have no problem playing with that App Store since I know what it is. The way to increase my odds is in quantity not quality so I wouldn’t even bother with anything but throw-away apps created in time that was discretionary. Which comes back to the original point of the author, the “illusion of a viable business model”. I have no such illusions but most developers playing the slot machine in the App Store do, for a while at least…

archimedes

Perhaps he should have stayed with Electronic Arts - they seem to be doing just fine on the iPhone.

The iPhone only has a handful of high quality RPGs (Chaos Rings being a notable example.) If 3DO’s Might and Magic series were available, I’d buy it in an instant!

archimedes

On Google apps and Apple apps:

Riffing off of this and a random thought? Did anyone notice that Apple essentially pulled a Google with the second half of the iPad 2 announcement? A month ago, Apple fans were mocking Google for hiring developers to create really nice Android apps. But what did Apple just do with iMovie and Garage Band for iPad?

Google obviously *should* hire developers to develop Android apps that aren’t garbage.
There are tons of great apps already for the iPad, but that should not prevent Apple from developing iWork and iLife for it!

On Nintendo:

Nintendo tried to improve quality with stricter licensing and their “Nintendo Seal of Approval,” but that system seems to have broken down with the Wii, which has been cursed with excessive amounts of shovelware.

zewazir

If that were the case, then crap apps (of which there seems to be an abundance) have the same chance at making it big as well developed apps.

You got it! smile

So you are actually claiming that poorly written apps, which people therefore will NOT like, have as good a chance of successfully selling in large numbers as well written apps which people DO like?

Gotta call BS on that one.

Bosco (Brad Hutchings)

So you are actually claiming that poorly written apps, which people therefore will NOT like, have as good a chance of successfully selling in large numbers as well written apps which people DO like?

Gotta call BS on that one.

Except that we’re calling BS on your therefore first. App quality and the social graph don’t necessarily correspond. One feature, implemented adequately in an otherwise crappy or over-complex app, might be just enough to make an app a best-seller. An Android example is ACast, a podcasting app that is way over-complex, but downloads podcasts in a way that makes them playable in the stock Music app. Google Listen, an absolutely and well-organized beautiful podcast app by comparison, doesn’t do that. Having podcasts playable by Music makes them available to all sorts of home screen widgets.

zewazir

You don?t have a clue about what it takes to write throw-away software vs software that is non-trivial. Sorry, but you are way too naive about how the App Store works to discuss further with you.

Fine.  Don’t discuss it with me.

Seems to me that is the EZXACT problem.  Developers looking at the whole thing ONLY from the developer’s POV. Guess what: developers are nothing more than basement nerds unless they pull out a product that the consumers want to purchase. MAYBE developers need to start looking at things from the consumer POV. After all, it is ultimately the consumer that pays developers for their products.

From the consumer POV, I will tell you this: people do not look to the App Store for “non-trivial” software. Someday, it may expand to the point we will look for high end DTP and vector graphics programs using the App Store. It is not there yet, so, as I statd before, what we look for is reputation, which does not come solely from the online ratings, but even more so from what coworkers come in showing off on their iPhones. I see a great app that does the job it is designed for efficiently, with intuitive, even elegant UI, I pay attention to where it came from, and look for more by the author or company INCLUDING looking to see if they have “non-trivial” application software.

I already explained shopping habits to you, but since it is the consumer POV, you don’t want to hear it. Your loss, because until you understand how the consumer views and uses the App Store, you will continue to perform poorly in it, thinking “throw-away” apps are your only avenue to success, and that “throw-away apps” success will somehow diminish application software developed and sold through other avenues. There is no reason - nor any data - to back up your fear mongering that the App Store model will do anything of the sort.

Bosco (Brad Hutchings)

@zezawir: I couldn’t tell you who any of the publishers of my favorite iPhone or Android apps are, aside from Rovio and a couple friends who wrote the apps. One of us certainly isn’t the typical consumer. I’m gonna do a little informal survey, asking everyone I know to name their four favorite apps and the developers. I bet most don’t even get Rovio grin.

For the typical consumer, mobile app stores are about inexpensive novelty and convenience. That’s where it starts and ends. For developers though, there’s up-front investment and having some fallback revenue channel. If the stars don’t align and you’re stuck around “average” revenue without some other way to monetize, you’re hosed. And that’s what increasing pushback about Apple’s total control boils down to. Sound business theory supported skeptics like me when this thing started. The numbers are supporting the practical devs now.

CommonMan

For the typical consumer, mobile app stores are about inexpensive novelty and convenience. That?s where it starts and ends.

Absolutely. I will leave this interesting discussion with an amusing parallel that illustrates the issue of “race to the bottom” and the disconnect between what people say they want and what they actually do. I am sure you know this from your experience of actually catering to customers than the black and white picture some people are bringing here.

A long time ago I was involved in organizing a street food festival as part of a downtown revival effort of a small city. We would get a large number of restaurants involved in setting up stands. They would pay a rent for the space and a cut of the proceeds to the city. Because the event was spread around a couple of blocks and there was entertainment at some spots, some spots were more coveted and lucrative than others for people who could get them.

One year because of complaints that the same restaurants were getting the choice spots and not giving a chance to new restaurants to get business and the possibility that new restaurants would not participate, the committee decided to start a new allocation scheme. For the next event, they would have a lottery amongst the restaurants for the spots. For the following events, they would allow restaurants to pick their spots prioritized based on the revenue share we received, the idea being that the most popular ones (as measured by revenue) would get the choice spots first. In other words, let the customers pick the winners/losers themselves.

When we looked at the priority list for the second event, the top spots were all “greasy spoon” burger/hot dog or diner like places and we knew we had a problem. We went ahead and did our scheme anyway so all the choice spots were occupied by these fast food places while the higher quality food restaurants got the less desirable spots. This almost killed the event for the following one. Most of the good restaurants indicated that they would not participate next time and we got slammed by the media as a “food festival of greasy food”. People themselves complained that the “quality of the food” was terrible and that the event had gone downhill.

We threw that system out and came up with something that worked to provide diversity and a choice at multiple levels to cater to different tastes and budgets. That was a more sustainable ecosystem between restaurants and customers.

The above experience will not come as a surprise to any developer who has dealt with the App Store as it exists today and the parallels between the spots and the rankings and the consumer behavior should be striking.

Any student of history will know that things (art, music, literature, architecture, etc) that have endured and/or considered worthy have never come about because of popular vote but this doesn’t imply it is the other extreme of not catering to the audience at all. I am always amused by people who see it so black and white but these are not the people who create successful businesses anyway.

What is ironic is that Apple itself is not creating good stuff based on popular appeal but they take a position and they get their audiences to buy-in and yet they do not want to allow their ecosystem to get the kind of competing field that they enjoy in the market for innovation, quality, and sophistication. Weird.

Apple fans themselves would not concede Android to be a high-quality OS relative to iOS just because it manages to get a higher market share equating quality to popular appeal or as I expect in the future to higher total revenue.

It remains to be seen when Apple would change policies to create more diversity of price points and quality than this monolithic “race to the bottom” type of system at least for the app ecosystem. Hopefully, before it is too late.

Bosco (Brad Hutchings)

I’m not really pessimistic for Apple and its ecosystem, though. There will always be enough developers who want to take a shot at greatness, however unlikely. The costs of developing an app, while higher than expected payout, are not terribly high. Average I’d bet is on the order of $20K-$30K (which might be opportunity costs for smaller devs) for expected two year payout of $8K - $16K. There is an endless supply of suckers who will take this bet with the status quo system.

The big problem occurs when visitors to the food festival realize they can pack their own food, or pick up take-out on the way, i.e. when the garden no longer has its walls. Right now, people talk about app stores as if Apple’s is the model and everything else is evaluated in its image. With Android crowding iPhone into a niche, that should change for phones, where more people will begin to see the App Store as a hindrance. Hopefully the same dynamic will play out with tablets. Most of us have managed to gather and install our own software for 15+ years of the Internet age.

App stores are a great convenience. As a requirement though, they are a much bigger non-starter for more regular people than most here imagine.

Log-in to comment