Friday, May 10, 2013

The App Store is a Ponzi scheme

The best apps on the app store are apps that provide some type of utility. They are useful. They are helpful. These are the apps that you use on a regular basis. They are apps that help you take better pictures like Camera+, apps that help you track tasks like Appigo's Todo, and apps that let you create and modify office documents like Documents To Go. Apple even makes these type of apps like Pages, Numbers, and Keynote.

Actually there are two types of apps on the App Store (that try to make money as a paid app). The one that gets the most press is the gamed/entertainment category. If the developer is lucky, these typically make *a lot* of money all in a weekend or two. Their monetary model is a lot like the movie industry. The apps are bought in order for people to be entertained. After the first week or two, the app is old and few people will buy it.

Apple has told people to go buy these useful apps in order to make your devices more productive and valuable. How many years did Apple run the "there's an app for that" advertising campaign? And they are right. When I go buy Apple's Pages app, I no longer feel like I need to have Microsoft Office for my iPhone or iPad. I can download a document, modify it, and send it back out to a coworker. No Microsoft Office needed, Mr. Gates.

These useful apps are like a Ponzi scheme.

Let's say that you buy that app. You pay your $10, $5, $.99, or whatever. What do you expect to get for your purchase? You expect a quality app that does what the app description says. You expect that you will get updates to fix minor bugs. But what about new features? App developers add big, new features trying to get new people to buy their app.

And this is how the App Store is like a Ponzi scheme. If new customers stop buying the app, developers stop updating the app, and all the old customers stop getting the increased value from updates to their favoriate apps. Somebody has to pay for the developer's time. I would love to see some analysis that shows how many of the apps on the App Store have not been updated in the last six months, or the last year?

This has to be fixed. Apple wants developers to create great apps. That is what they tell the developers repeatedly at WWDC. Great apps sell more devices, which makes Apple happy. The problem is that developers make more money selling new apps and less money updating their current library of apps.

Why should an app developer invest a couple of weeks of their time adding a new feature? It will not bring in new customers. It has the potential to break something for the old customers, which increases support costs. Why bother?

Potential solutions

Trial periods for apps would be nice. Amy Worrall has been getting some visibility for her comments on free trial periods. While I think this would help increase the average selling price of apps, I don't think this would fix the Ponzi problem.

Advertising? You have to sell a lot of copies of an app in order to make enough money from advertising. While that might work for the top 10 in each app store category, it doesn't work for smaller niche apps.

Freemium? For the most part this just creates crappy apps. Who hasn't played a free game that quickly isn't fun because you have not paid for some In-App-Purchase power up? It usually sours me on the game faster than I develop a desire to buy the extras. These apps usually just feel like a scam instead of something well made and designed to help me solve a problem.

Subscriptions? For some things this works well. If there is a backend service that can really provide value, have the user pay for the service and the app comes for free. But not all apps make sense to have a service part to them. I get a lot of utility out of Apple's Pages app without adding a paid, backend service. How about an email client or web browser? If you forced a subscription on to that, it would break the value of the app.

I wonder if some sort of expiration date would work? Maybe you get free updates that are compatible with the current version of iOS for a year?

I'm still trying to think up a good solution. But I am pretty sure that nothing will work well without Apple's cooperation.

Monday, February 27, 2012

Apple TV

In Walter Isaacson's biography of Steve Jobs, Steve said 'I finally cracked it.’ http://www.businessinsider.com/apple-television-steve-jobs-2011-10 When we heard that, everyone wondered what the answer was. I think I have figured out part of it. Now that I've thought of it, it seems obvious to me that Apple is going to do this.

1. How is Apple going to make money from the Apple TV? They are going to partner with cable companies and take a piece of the cable company's pie, the monthly revenue from you.

Evidence: http://www.theglobeandmail.com/globe-investor/rogers-bce-vying-for-a-bite-of-apples-itv/article2328772/

Why on earth would Apple need a Cable TV partner? monthly revenue, bandwidth and content. First the money part. How does Apple make money off of the iPhone? It is only partly from the $200 they charge you for the device. The real money is in the $450 subsidy from the carrier and an ongoing piece of your monthly bill. That is what the partner is going to provide - a way to make the cost of the box to the end consumer really low.

Go out to Rogers.com and they will show you a box that they will give you for free called Nextbox made by Cisco that gives you an HD cable tuner and Tivo/DVR/PVR.

Go out to Dishnetwork.com and they will show you all kinds of technology that they will give you for cheap, if only you will sign up for a two year commitment to programming. That sounds a lot like the deal that the cell phone carriers are pushing, doesn't it?

All the cable providers are doing this now. Except their technology execution is mediocre. The only company that was able to deliver a box that you didn't mind using was Tivo. They failed because they didn't deliver content too. Apple will fix that. For the first companies that partner with Apple, this will be a fantastic way to get more subscribers relative to their competitors (example AT&T). Later it will be really bad for you if you don't have Apple as a partner (example T-mobile).

2. Delivery: Also from the same article, “They’re looking for a partner. They’re looking for someone with wireless and broadband capabilities.” I think Apple wants to not get in trouble with the people that own the "pipes" like NetFlix has. If you buddy up with them, deliver value to them so they think they are getting a piece of the pie, then they will not only be happy with you about how much of their pipes you are using, but they will be happy with you as you take their money. So part of this is that the delivery of the content can be over wireless or the high speed internet that the partner provides.

3. Content. Apple has seen the problems that Netflix and redbox have had with the content owners and they want none of it. The content owners seem to want to abuse the customers. Netflix and redbox are trying to fix this by going around the current providers of content: the cable TV and satellite operators. The content owners just abuse the crap out of Netflix and redbox for simply trying to make the customers happy.

Apple is going to fix this by partnering with the content providers. You will sign up for your cable service and get the content from the cable provider. But Apple will implement a level of redirection so that you don't have to use the classic "what's on TV" paradigm.

4. Packaging of the content.

My kids don't understand commercials very well. The younger ones yell when a commercial comes on because they think mom/dad has changed the channel on them. They also don't understand that a show "isn't on right now." Tivo has taught them that you can sit down any time you want and call up an episode of your favorite show.

What if you used iCloud as your storage? Take one part live TV streaming (the Oscars, the Superbowl, etc) and add an iCloud cache of everything broadcast on your cable provider in the last three months. Add a Quicktime playback interface, which shouldn't be confused with time shifting. This is just playing back content, just like playing a DVD. Importantly this works around Tivo's intellectual property. Add decent search, suggestions, etc. Use Siri for voice activated searching. Have you ever tried to type in the name of a show/search term using a TV remote? It sucks. Add some Apple interface magic, and you're golden.

Imagine asking Siri: watch the news from CNN, play Sesame Street, play the Super Bowl, watch House from two weeks ago, etc. Using the natural language processing, it just figures out the episode you want to watch, even though you didn't really describe it that well.

Because you are going to use iCloud for storage, there will be almost unlimited access to old content. You don't really need to worry about the size of the hard drive in the box that Apple is delivering. It just isn't important.

5. How Apple might screw this up: requiring everyone to buy a new TV to get the service.

I just replaced my TV this last fall. The last time I bought a TV before that was maybe 6 years ago. The reason I replaced my TV was not to do an upgrade, it was because the old TV died. I don't replace my TV every two years.

If they do this right they will release an upgraded Apple TV box that does most of everything that the flat panel Apple TV does too.


Would I dump DishNetwork, who I have used for over 12 years because I like their DVR, and sign up with Comcast to get this new product from Apple? Absolutely. Without hesitation.

Saturday, April 23, 2011

When was the last time you paid for something digital through a webpage?

I was reading some comments by an analyst talking about iPhones, iPads, the "Post-PC" era, etc. You can read it here if you are interested. One topic was talking about the idea of apps vs HTML5.

Anyway, I had a thought while reading the analyst's discussion. When was the last time I personally paid for something digital through a website?

There are lot of websites where I pay for physical goods. Amazon.com, eBay, etc.

NetFlix: that's a good one. You pay and get access to streaming movies.

World of Warcraft: another good example. I don't do play online, but a lot of people do.

How about paying for online access to news? Not many people do it. The dot com folks taught us that we didn't need to pay. Their "get marketshare first, make money later" model made sure of that.

Do you pay for your personal email service? Gmail, hotmail, ? Nope.

Pandora? Nope. What happened when they tried to get everyone to pay? We all left and found another service.

Hmm....

Here's the thing. As consumers, we pay for value. How do we decide what price to pay for that value? We do it relative to something else. We feel that our personal email has to be free because there are so many good options that are. We are usually willing to pay a bit more for a book that has more pages, or at least looks thicker.

Back to Pandora. They want to charge $36. It happens to be for a whole year's worth of listening, but that is a big mental jump in price. Why not charge $3/month? Give me the first month for $1 and get me hooked. If it is really that good, I'll buy right? Have you not heard of Cocaine marketing?

But I'm getting distracted.

Apps. Why do so many people pay a couple of dollars at a time for apps?
1. It is a different delivery mechanism. What do we compare it to? (remember price/value comparisons) Other apps. Yeah, yeah - you're smart enough to know that it isn't much different from a website. But because it packaged differently I'm not expecting it for free.
2. Yes, there are free apps with advertising. But often times I'm willing to pay just a bit more for quality and no nagging. They are cheap. If the apps were $30 (cheap boxed software at a store) then I would have to analyze, comparison shop, question if I need it, etc.
3. Visibility. I can find all this value easily at one location. The app store.
4. I don't give my credit card and person info to some random app developer that may or may not be trustworthy, I give it to Apple. I already trust them. I bought my phone from them. Android/Google is a bit more complicated, but similar. On a site note, note the difference in the trust model and that Android users don't pay for apps as much. Interesting!

A website trying to sell something usually isn't any of the above.

Will HTML webapps make a comeback and destroy the app store model? Nope.

Yes, it costs more money to develop apps for each app platform. Trust me, I know all about that. But I can make enough money to make up for that.

If I made my app as a webapp, would people pay me for the value? Nope.
1. They would expect it to be free. Remember your dot com training!
2. Without the high volume of purchases through an app store, I would have to charge more, which would keep potential sales away.
3. My value would have to compete with many other websites that are delivering other types of value. How many people do you know are in the internet marketing business? I know a lot.
4. Would you trust me with your credit card for a $5 purchase? Not unless I was a big enough company to have a reputable brand.

The HTML side of the argument seems to usually land on the idea that HTML, being a standard, will win because it is ubiquitous. They say that it is to expensive to develop nonstandard apps for each app store.

Other than maybe Apple talking about their app store, you don't hear anyone arguing back on the side of the apps. Maybe they are to busy writing apps? If apps don't make money for them, they will come back to other kinds of software development in a couple of years.

Wednesday, December 8, 2010

Moving from NSLog to better logging

I've wanted to improve the logging in my apps for quite a while. I've searched and found a number of websites that talk through different options. I found these to be quite helpful:
http://stackoverflow.com/questions/969130/nslog-tips-and-tricks
http://cocoaheads.byu.edu/wiki/different-nslog

But I didn't see a "finished" solution that was polished like I wanted it to be. Here is what I wanted:
- Easily turned off; don't run in a distribution build
- Short to use; NSLog short. I don't want anything longer
- Show the method name and line number

The solution I came up with looks pretty good. To use my logger, all I have to do is use a GPLog() statement, just like NSLog(). The cool thing about that it is that it made for an easy find and replace to use it through mode code. Statements like GPLog(@"%d", numberVar); will work just like NSLog does. The statement GPLog(@""); will produce something like this in the log.

2010-12-08 16:19:07.537 GW Mail[8016:207] -[AppDelegate_Phone application:didFinishLaunchingWithOptions:] (33) ::


I put the following in my .pch file so that it would be globally available.

#define kDevMode

#ifdef kDevMode
#define GPLog( s, ... ) { \
NSLog( @"%s (%d) :: %@ \t", __PRETTY_FUNCTION__, __LINE__,\
[NSString stringWithFormat:(s), ##__VA_ARGS__] ); \
}
#warning kDevMode ON!
#endif
#ifndef kDevMode
#define GPLog( s, ... ) { }
#endif

A few things to notice. To turn logging off, all you have to do is put an x or something in front of the #define kDevMode statement.

When the logger is turned on, it throws a warning. This helps you to remember to turn it off before you do your distribution builds.

It's pretty straight forward code. Hopefully this is helpful to someone!

Saturday, May 22, 2010

iPhone Analytics

Pretty early on when I started developing iPhone applications, I added analytics to my apps. Specifically Pinch Media's package. Until recently I have been pretty happy with the analytics I've gotten from their system. Not that long ago, Pinch Media was absorbed into Flurry. That's when things went bad. Specifically:

1. Flurry reports session based analytics. Interesting if you are a free/add based developer. Not so much for a paid app developer. Pinch was much better in that it reported based on device.
2. They don't answer their email. The automated response email doesn't count. The Pinch folks were really responsive.

So, I thought about this for a bit and came up with the criteria that I'm going to use as I go out and review different analytics companies. Basically, it comes down to the questions that I want to be able to answer from my analytics.

1. I want to localize my app. What languages do my customers speak? Country != language. Some of those nice Canadians prefer French. Flurry only reports sessions by region (Europe, NA, etc.) Not very useful for making a decision.

2. How many of my customers are trying to use an iPad? Are my customers primarily iPhone or iPod? What percentage are running new enough hardware that they will be able to take advantage of the new multi-tasking features in iPhone OS 4.0?

3a. What iPhone OS version are people running? If I need to move my app to 3.1, how many of my existing customers will I leave behind?

3b. Based on last week's stats, how many sales will I loose next week for moving to 3.1? As iPhone OS 4.0 is released, how quickly are my current customers and new customers moving to 4.0?

4. I realize that my apps are very small within the overall app store ecosystem. Do I get access to app store wide stats and trends towards the above questions?

5. Looking at the above metrics, compare user count to average session count. Is there a disparity somewhere? e.g. Do iPad users buy/install my app but not use it because they are frustrated with it for some reason? That would imply that I have a problem that I need to work on somewhere.

6. Does the event/action tracking system have an export function so that custom reports can be run on the events? I want to be aggregate the counts of some of my events and such.

7. Can I export my app's data and compare it to my Lite app's data? That would be very interesting.

Sunday, April 4, 2010

Thoughts on the iPad

The iPad was released yesterday. I've had a day to play with one and I have a few thoughts.

What is the iPad and what do you do with it?

iPhone owners, iPod Touch owners, and perhaps other smartphone owners will understand quite quickly what the iPad is. It is a large iPod Touch.

But more importantly, what does one do with an iPad? If you are one of the group of people I just mentioned, this will be pretty obvious. You use the iPad for all of the things that you use a smartphone for when you are home and your computer is on the other side of the room. The activities fall into two categories; quickly done and cheaply done.

Quickly done
- You are sitting on the couch watching a movie and you wonder what other movies an actor is in? There is an IMDB app for that.
- You wonder what movies are playing at the local theater. I like the Flixster app for that.
- You want to post something quickly to Facebook. There is a Facebook app.
- You want to check the score for the latest game. There is an ESPN scorecenter app.
- You want to check how the stock market did today. There are many apps for that.
- You want to see if the weather will be nice tomorrow. There are apps for that.
- You want to check if you have received that email you were expecting. The Mail app can do that.
- You have a feeling that there is a 9am meeting tomorrow and want to check your calendar. There is a Calendar app for that.
- You remember something that needs to be done tomorrow and want to put it on your to do list. There are many ToDo apps for that.

All of these things are quickly and easily done on an iPad. What, you don't have an app for that yet? No problem. The app store app lets you find a good app in just a couple of minutes. And this leads me to my next point.

Easily done

Let's say that I want to play a quick game as a diversion. Nothing so time consuming as the latest entry in the Halo or Super Mario Brothers franchise, but something simple and fun. Think Tetris, Solitare, or just about any arcade game from the 80's. The App Store delivers that.

I can virtually browse the isles and find something fun to do for just a few dollars. Not a game person? The iPad has books. Lots of them. Some of them for free. Want to spend some time getting the news? There are a lot of good apps for that in a format that is even better than the iPhone.

This is what the iPad is all about. Quickly and easily done.

Monday, November 16, 2009

Developers leaving the iPhone? Not yet.

There have been a number of articles written lately about developers leaving the app store in frustration. ArsTechnica Facebook Developer The reality is that these folks leaving are very much a minority and will make very little difference in the short term. It is kind of like an employee that leaves a company because the employer is treating the workers like crap. The question is why do the other folks not leave? And will that change?

The reason is that there are over 50 million iPhones and iPod Touches. iPhone sales numbersOver 50 million potential customers. No other app store can match this right now. Trism

Fast forward 12 months. Because Android isn't locked to just one carrier or even one manufacturer, the number of Android devices will grow significantly over the next year. Apple is leaving money on the table by locking themselves into AT&T. Sure, they are more profitable per handset sold, but the cost of not having sold twice as many devices will catch up to them within a year.

Back to my employee/employer example... If an employer abuses its employees when the economy is down and workers can't leave, it will catch up with them as soon as the economy picks up. Apple will find themselves in this situation a year from now. A year from now the Android numbers will be high enough to make it every bit as appealing of a platform to business on as Apple's. At the end of the day it is all about the numbers.