Tomi Ahonen is a famous analyst – who, unfortunately, is firmly entrenched in the “mobile web” side of things. It thus is not too surprising to see him bash the iPhone’s App Store. As many of his points also apply to other stores, I have decided to take some parts of his article and comment on it below (he permitted it on the blog btw).
His first point looks at financials, and is pretty reasonable:
… the relevant number is that half of all paid iPhone apps get less than 1,000 downloads. The median point is under 1,000. Lets call it 999. That number times $1.95 per paid app gives the ‘most typical app’ the total revenues in its lifetime – the full two years of App Store existence – of $1,948 dollars. This is before Apple takes its cut of 30%, so we are left with $1,363 over two years or $682 per year. This is so ‘successful’ that half of all of the developers of the 164,250 apps – will actually earn LESS THAN THIS.
…
Next up is download numbers. He ignores one thing here: things like the 100 million sold Tetris copies required hundreds and hundreds of contracts with carriers – while the iPhone head has to worry about but one distribution point:
So, most paid iPhone apps are games and some games can have ‘huge’ success, eh? Like the afore mentioned Angry Bird, the best-selling iPhone paid game app of all time with 4 million downloads at 99 cents ie earning 4 million (before Apple’s cut) and the previous champion, Bewelled 2, which had 3 million paid game downloads. You think that justifies your mission? That these numbers are ‘impressive’ for a mobile phone game? Sure. But I have some friends over there at Artificial Life here in Hong Kong, whose main business is in mobile, but not in making games for phones (they do TV-interactivity as their main business). They had a clever little game a few years ago, you might have heard of it, won many awards, called ‘V-Girl’ the virtual girl friend on the phone, in the form of an avatar. Like an adult age ‘tamagotchi’. These guys are not EA or any major game developer and this was not their main focus. They celebrated their 4 million paid download milestone – back in 2008. 4 million is nothing in the real world of mobile paid data services and apps. Nothing.
Take Tetris. Tetris sold 35 million game cartridges to the Nintendo Gameboy platform. Pretty decent numbers for a gaming platform. Guess how many paid downloads to mobile? Over 100 million. One Hundred Million. Paid game downloads (on Java obviously, not smartphones). And this is nothing in mobile. Nothing! Our numbers are huge. I want huge numbers. That – 100 million in Tetris – is nothing.
He finally goes on to state that creating iPhone-only apps for advertising is dumb. While this part makes sense at first glance, you should also keep in mind that the average iPhone buyer (aka not the one reading TamsIJungle) usually is one who is interested in luxury and “bling”:
But you get my picture. Take Hilton Hotels (the idiots). They developed an iPhone app to help busy travellers book their room service meal. An iPhone app to book a meal? And now limited to 3% of prospective clients? Why was this not done via a mobile Web (HTML) or WAP site? Is it somehow impossible to book room service meal on an interactive mobile website? Darn! Or take Walgreen the US drug store (the idiots). Their ‘mobile strategy’ was an iPhone app pleasing 3% of their customers and ignoring 97% while rival Rite Aid drug store did the SMS based loyalty card, prescription renewals etc and reached the pockets of 100% of Americans. Which is the smart move, which is the moronic move? And thats before we factor in the cost. The iPhone App still costs typically $35,000 to develop. You know what a mobile web site development costs on WAP or Web? Try one tenth of that cost – $3,000 according to that same source I used earlier, Internet Retailer, on May 1, 2010.
The full, somewhat long, but nevertheless very interesting article is below:
http://communities-dominate.blogs.com/brands/2010/06/full-analysis-of-iphone-economics-its-bad-news-and-then-it-gets-worse.html
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