Developer Riches: Is There An App For That?

Everywhere I turn I hear people talking about some iPhone app. The funny thing is, even a week later, they’re not talking about that app any more. They’ve forgotten all about it. The joy and wonder of that “app that was so great last week” quickly dissipated; and when asked what happened, the response seems to fall in one of the following buckets:

  • I’ve got another cool one, the other one was so last week
  • I got bored with it
  • Are you kidding, I’ve got more important things to worry about

So while the responses (okay, my sample size was only 8 and hardly statistically significant)  seemed like the iPhone apps were just fashion trends or for things people did when they had too much free time, it got me wondering what all the developer craziness around iPhones apps was about. After all, at last check, it costs $99 to register for the ability to attempt to publish an app to the iTunes App Store. Yes, I’ve looked into creating my own app, but at a $99 upfront cost and blog buzz that Apple arbitrarily blocks or delays app approval, there’s no guarantee that your app gets published, or if it will even make up your $99 fee.

Enter Appolicious and their guest post on TechCrunch. They share data about the top apps tracked by Appolicious and represents a sample of the apps out there. Instead of making you read the chart and strain your eyes, I made my own version to strain your eyes, and the data is telling.

This first chart represents the top 25 from the article, visually depicting how quickly the sales drop to nearly invisible levels. Of course, you lottery players can focus on the top 8 that sold over 100,000, but as a realist, I put that in the bigger picture of cost/benefit and expectation in light of the supposed 200,000 iPhone apps as counted by AppShopper.

Someone with more restrictions on time and/or money might take a more realistic view of the second chart below. This one is based on the top 25 from the chart, after the top 10 highest grossing apps are removed. This is where the truth is really revealed and the real decisions can be made.

After the top 20 in this group, the apps sold appear to be rapidly sliding below the 10,000 sales mark. Why is this important? If your app sold 10,000 units at $1 (rounded up from $0.99 for ease of discussion) and Apple took a 30 percent cut, that leaves $7000 for you. But put your reality hat back on, and you’ll remember that most of those apps come in at less than that 10,000 unit mark. Suddenly, the odds of riches seem pretty low, and while I might still be hopeful that I’ll make my $99 fee back, I would worry about making my development costs back.

So… what can be learned here? A careful dose of reality should help set expectations when looking for riches in the iTunes App Store. I still believe that companies should build the apps, but I believe that they should do it based on a longer term branding and awareness strategy. Branding and awareness, yes, but riches? I don’t think there’s an app for that.

About Duane Kuroda

Business ninja, deal hunter, Internet marketer, and technology fiddler obsessed about growing companies and launching products. Currently at Peerspin, Duane’s past lives include Vice President of Marketing roles at companies leading micropayments, Internet video, and online communities as well as research and consulting for mobile advertising. Duane has spoken at conferences including Digital Hollywood and Digital Video Expo on topics covering monetizing online content and online video, has appeared on TechNowTV and KNTV, and has been quoted in various magazines. Follow Duane on Twitter: @dkuroda.

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