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Full Analysis of iPhone Economics: Bad News?

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Re: Full Analysis of iPhone Economics: Bad News?

#11

Post by mgkimsal »

pvg wrote: post #8
AlisdairO wrote: post #5

I'm not sure I buy that a typical iPhone app costs $35,000 to develop. Considering the simplicity of most apps, combined with the fact that many apps are effectively the same program with some content alteration, it seems like a really inflated figure.

It doesn't really make much difference, for the purposes of his analysis. Let's say a typical app costs $1500 to develop. If his other numbers are right, that typical app would take about 2.5 years to break even. His argument is that, on average, developing an iPhone app is, in itself, a fairly dismal economic proposition.

However, making, say, 80, spending time promoting them, and perhaps having a few of those be moderate successes may make this a much more viable option. I have a friend who's pursuing this option of making multiple apps (not sure he's to 80 yet, but will likely surpass that in the next year).

I agree, the chance of one app being the runaway success that affords one an early retirement is pretty remote, but the tech press loves to promote the huge success stories, and many others love to follow them.

Re: Full Analysis of iPhone Economics: Bad News?

#12

Post by rpledge »

Interesting analysis, but I'd like to see the numbers for apps that are actually maintained and marketed vs. some guy who hacked up an app and never fixed any bugs or improved it based on feedback. I suspect the number get better if you filter out the crappy unmaintained apps (but of course, this isn't an easy data set to obtain)

Re: Full Analysis of iPhone Economics: Bad News?

#13

Post by chops »

warfangle wrote: post #9
chops wrote: post #6

Earlier quoted context omitted.

Nope, that's not what it is. He explicitly states that he excludes the free apps in the revenue analysis. He uses a combination of numbers from Apple and from other 3rd party services to come to the median revenue per paid app at something like $680/year. He also fully acknowledges that there are some extreme examples that make it big, but that half of all paid apps are currently making less than $680/year. This is a…

Then there's also the point that while some extreme examples made it 'big,' in the long run of things mobile, 3M downloads really isn't all that big.

Indeed. That part was quite fascinating and puts things into perspective. Target big to win big.

Re: Full Analysis of iPhone Economics: Bad News?

#14

Post by briancooley »

"Full Analysis" seems like a bad title for this post.

First off, in app purchases are not included. Secondly, his argument against free apps is simply that the reach is smaller than other platforms. Finally, he acknowledges that the median paid app get fewer than 1000 downloads.

The 25-50K number for development costs is way off for the median app. Something like $5K-$10K is more in line for most of the apps I'm seeing (but I work cheap), and I've done a couple small ones (probably more representative of the bottom half of the distribution) for clients in 3 days' time.

Re: Full Analysis of iPhone Economics: Bad News?

#15

Post by DougBTX »

It seems like the expectations are very high for the App Store, so perhaps this article is just a reaction against hype.

But, don't we say that only one in ten start-ups makes it? So, as a baseline, why expect more than one in ten apps on the App Store to be profitable?

Re: Full Analysis of iPhone Economics: Bad News?

#16

Post by roel_v »

briancooley wrote: post #14

"Full Analysis" seems like a bad title for this post. First off, in app purchases are not included. Secondly, his argument against free apps is simply that the reach is smaller than other platforms. Finally, he acknowledges that the median paid app get fewer than 1000 downloads. The 25-50K number for development costs is way off for the median app. Something like $5K-$10K is more in line for most of the apps I'm seei…

None of this refutes his point, which is that developing for iphone is a suboptimal use of marketing/advertising dollars. Even if you'd assume his numbers had a 100% error margin, you still couldn't get iphone apps to work.

Re: Full Analysis of iPhone Economics: Bad News?

#17

Post by Manfred »

rpledge wrote: post #12

Interesting analysis, but I'd like to see the numbers for apps that are actually maintained and marketed vs. some guy who hacked up an app and never fixed any bugs or improved it based on feedback. I suspect the number get better if you filter out the crappy unmaintained apps (but of course, this isn't an easy data set to obtain)

I agree, there are a lot of apps that didn't take the developer more than 5 hours to put together. Earnings made by well made apps is probably much higher.

Re: Full Analysis of iPhone Economics: Bad News?

#18

Post by pvg »

mgkimsal wrote: post #11
pvg wrote: post #8

Earlier quoted context omitted.

It doesn't really make much difference, for the purposes of his analysis. Let's say a typical app costs $1500 to develop. If his other numbers are right, that typical app would take about 2.5 years to break even. His argument is that, on average, developing an iPhone app is, in itself, a fairly dismal economic proposition.

However, making, say, 80, spending time promoting them, and perhaps having a few of those be moderate successes may make this a much more viable option. I have a friend who's pursuing this option of making multiple apps (not sure he's to 80 yet, but will likely surpass that in the next year). I agree, the chance of one app being the runaway success that affords one an early retirement is pretty remote, but the tech p…

If you are making 80, or even 20, chances are you're not really making apps but repackaging offline or online content in the form of an app and that's a rather different niche. It's also one that Apple is making efforts to squish, although I'm sure it will continue to thrive on Android and other non-restrictive markets.

Re: Full Analysis of iPhone Economics: Bad News?

#20

Post by mgkimsal »

pvg wrote: post #18
mgkimsal wrote: post #11

Earlier quoted context omitted.

However, making, say, 80, spending time promoting them, and perhaps having a few of those be moderate successes may make this a much more viable option. I have a friend who's pursuing this option of making multiple apps (not sure he's to 80 yet, but will likely surpass that in the next year). I agree, the chance of one app being the runaway success that affords one an early retirement is pretty remote, but the tech p…

If you are making 80, or even 20, chances are you're not really making apps but repackaging offline or online content in the form of an app and that's a rather different niche. It's also one that Apple is making efforts to squish, although I'm sure it will continue to thrive on Android and other non-restrictive markets.

I can say that in the case of my friend, it's not repackaged content, but actual real apps. They tend to be somewhat on the basic side, but are nonetheless 'real' apps in the sense of having real hand programming behind them and such. FWIR, he's using Titanium, which makes it pretty easy to do basic apps fast (but still native apps all the same). Whether Apple will continue to let Titanium exist on the iOS platform is a whole other question :)
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