Why App Stores Are Not the Business Model for the 21st Century

http://www.fastcompany.com/magazine/142/killer-apps.html

by fiaz • 17 years ago

23 21 17 years ago

fastcompany.com

zck• 17 years ago

Interesting that they consider pg's site a blog.

brisance• 17 years ago

So what's the "business model for the 21st Century"? Advertising? No thanks.

axod• 17 years ago

advertising has powered the web for the last 10+ years. I'd expect it to be there for the long term.

Advertising is nice because it's optional. You can click ads, or you can just ignore them.

stcredzero2• 17 years ago

Ads are optional in the same way inhaling tobacco smoke was optional 20 years ago. You could go to bars, or you could just ignore them.

poutine• 17 years ago

Agreed, I much prefer to pay for an app that I use rather than deal with ad noise. Ads waste my time and attention, and in all my years on the Internet I've clicked on an ad probably 4-5x and never bought anything as a result.

joubert• 17 years ago

There's a difference between web-delivered UI's and application that run on the metal.

kasterma• 17 years ago

I really hope that app stores are on their way out, for exactly the reason the article gives (lack of openness). So even though I am at this point doubtful about them actually being on the decline, I like seeing articles that suggest they are. Maybe the articles can help with this decline.

stcredzero2• 17 years ago

So, his one bit of proof is that the LiveScribe digital pen's app store didn't work? A digital pen is very firmly a peripheral in the minds of users. Since it lacks its own display, it's going to be very hard to position it as a platform. Do users use it to unify data from other devices? Do users currently think of it as something to install stuff on?

No, LiveScribe is not going to have a future in App stores. But a Tablet device might do very well with one. The downside of App Stores is control. But the upside is the same. Do modern consumers want the chaos of the free market, or do they want safety and convenience? There will be constituents for both. But right now, safety is something that is still lacking for personal computing.

My prediction: there will be more App Stores. These App Stores will only be viable for platforms. Once they are widespread, there will be a backlash, but the App Stores and their highly controlled platforms will be a fixture in our digital future.

rgoddard• 17 years ago

To me, the interesting part was the fact that the App store was basically an after thought. Given how popular it has become indicates that it is filling a need. The long term viability of it is in question, but I think it has a good chance of sticking around.

Tichy• 17 years ago

There is no alternative to the app store, so I think drawing conclusions from it's popularity might be misguided. There certainly is a need for apps...

Besides, there is nothing wrong with App stores per se, just with them being the only option.

mattmanser• 17 years ago

Wrong, wrong, wrong. Consoles show that he is totally wrong. Closed platform, totally controlled by the vendor and software sales are increasing compared to the 'open' platform of PCs where sales are falling.

And who are these 'prominent' programmers he's talking about? Only prominent programmers I've heard of are famous games programmers saying that if they started now they'd be programming for the iPhone as it's so good.

What is it with people prematurely calling the demise of the app store? Wishful thinking won't make it happen.

dojo• 17 years ago

The fragmented nature of the mobile device industry is what makes it difficult for any competitor to come in and "dethrone" the big, bad Apple. It's almost like when it comes to smart and progressive mobile apps it's "Apple" vs "everybody else".

So... what needs to happen is a marketplace that's been created specifically for everything that's _not_ Apple iPhone; one that actually focuses more on the software, instead of the hardware, and one that can spell out how that new fun game "Kick the Squirrels off their Bicycles" can work on a Nokia and Motorola, because (as they're all web-enabled), the most important aspect would be the phone's web-browsing capability. Fennec [ https://wiki.mozilla.org/Fennec ] , for example, could be a pretty good starting point.

Firefox put a significant dent in IE's share of the PC hardware browser; something similar will happen with the iPhone, once people realize that they're getting charged _way_ too much for those iPhone contracts (kinda like ISPs screw[ed] people over by talking them into their 1+ or 2+ year "DSL modem service" contracts).

RyanMcGreal• 17 years ago

> Inspired by the spectacular success of Apple's App Store -- which observers believe pulls in more than a billion dollars in annual revenue (Apple isn't telling)

Isn't Apple a publicly traded company? How are they not allowed to disclose this?

protomyth• 17 years ago

Hide it on other lines of revenue.

joe-mccann• 17 years ago

Yeah, App store not a viable business model. You're right, some of the biggest players in tech have been wrong for so long: Apple, Google, and now Amazon.

Software engineering has been viable for years. The device is the only thing that is changing. Moreover, the author states the 'web' is the 'app' that works on every platform. The naivety here is palpable thru the page.

How many software titles work on Mac and PC and Linux? Plenty. Write code to one code base? Hardly.

Frameworks like Phonegap and Appcelerator's Titanium allow for some code re-use for mobile apps, but one is essentially utilizing the "web" view on those devices. So if you are really looking for performance you are betting against the phone's JavaScript interpreter to process your accelerometer video game versus the phone's processor itself.

The app store business model should not be one someone banks on, in my opinion, for all their revenue. However, the app stores existence and attraction to businesses should be seen as an opportunity for devs to provide services and expertise for clients WHO WANT/NEED apps. This demand, I don't see falling any time soon...

pchristensen2• 17 years ago

App Stores are an effective model because people are willing to pay for a baseline level of filtering. I can read anything I want online but I love buying certain magazines (New Yorker, Economist, Seed, etc) because I know the stuff in them will be good. Sure, some good writing might not make it in because of the editorial process, but I'm willing to live with that.

I think the future of App Stores is to branch into departments with their own kind of branding. The control and profit for store owners is too good to give up, but branded departments would give more variety. IE the Role Playing Game Store, the Silly Diversion Store, etc. This is technically simple to partition the stores like this, and it's would help solve the "big pile of apps" discovery problem.

Apple is more likely to let people/orgs create their own "app storefronts" and maybe give them 1% or 5% of the revenue. So if you shop at pg's App Store, you would get things that are simple and useful, while if you shopped at Scoble's App Store, you'd see every new tech gadget.

pchristensen2• 17 years ago

Please enlighten me as to the problem, whoever downvoted me? Apple could keep some of the open aspects of the App Store while still keeping control of distribution and profits - what's the problem?

jdrock2• 17 years ago

App Stores are much more likely to be a viable business for an already-successful technology company with a well-known brand.

Speaking from personal experience, App Stores don't work very well for smaller companies with a smaller customer base. An App Store is going to require a developer to learn a unique instruction set. The incentive for most developers to do this is to earn money from the company's customers. If the company is small and has a small base (even if it is growing), it's difficult to attract a lot of developers. The hurdle of learning the instruction set + the low potential of earning substantial revenue is not that interesting.

bad_user• 17 years ago

People should look at the Android Market. While the platform is backed by a strong brand, has big potential and it's open enough ... not too many developers have jumped in.

This may change once Android phones are popular enough and there's a story of someone getting rich in one month, working in his spare time.

The article does have a point ... the web eliminates distribution costs and the need for middle-men. That was one strong incentive for web-apps happening.

Unfortunately, with big software houses (like Google and Yahoo) making great apps available mostly for free to regular users ... people became accustomed to free stuff on the web. As a result, there are few online businesses that are profitable.

Even so, phones are becoming more and more like regular laptops ... and in time, more open, since that's inevitable (App Stores being artificial restrictions).

jdrock2• 17 years ago

Perhaps an additional requirement is good marketing from the App Store company. Apple aggressively markets the iPhone App Store. I don't see Google doing the same. iPhone Apps are a big success because they are "top of mind" for the general population. Android apps, not so much. I am sure most people have no idea what Android is or that there is an app market for it.

gfunk911• 17 years ago

The App Store model and the "free to install" model are not incompatible.

The App Store is hugely convenient, and makes it dead simple to install and pay for software. The part of the App Store that doesn't involve restrictive policies is a win. There is no reason that a sponsored App Store and the freedom to install whatever you want cannot coexist. In a magical parallel universe where Apple encouraged Cydia, that's exactly what we would have: App Store as package manager with a user-friendly front end and payment infrastructure.

Why App Stores Are Not the Business Model for the 21st Century

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