The App Gold Rush

Interesting piece from David Streitfeld in the New York Times:

Much as the Web set off the dot-com boom 15 years ago, apps have inspired a new class of entrepreneurs. … [But] only a small minority of developers actually make a living by creating their own apps, according to surveys and experts. … While people already employed in tech jobs have added app writing to their résumés, the profession offers few options to most unemployed, underemployed and discouraged workers.

It’s also worth restating that this push benefits Apple far more than it does the average developer. Streitfeld notes, “Since Apple unleashed the world’s freelance coders to build applications four years ago, it has paid them more than $6.5 billion in royalties.” Developers get 70 percent of each sale, so Streitfeld’s number means that Apple has made more than $1.95 billion through the App Store — and that figure doesn’t include the hardware it sold to developers.

At one point [a mom-and-pop developer couple] owned a 24-inch iMac, a Mac Mini, a 24-inch cinema display screen, two 13-inch MacBook Airs, a 15-inch MacBook Pro, two iPad 2s, two Apple TVs, two iPhone 4s and an iPhone 3GS. “We justify buying new models by saying we need them to test out the apps,” [Shawn] Grimes said. 

A commenter on Streitfeld’s article notes:

[W]hether it’s the 1898 Alaskan gold rush or Apple apps, the earliest and sometimes the luckiest to pursue any venture sometimes succeed, while the later surge of folks will have stories to tell their grandkids but little in the way of financial reward.

Another mentions a salient point:

I recently found that ~70% of the top 25 apps in a few random categories (wine, diabetes, parking) were initially published in the first 18 months of the App Store. Because Apple gives downloads-to-date great weight in search-results rankings, these first-to-market apps rank highest and are the first consumers find and buy, creating a feedback loop preventing better products from rising to the top.

I suspect 70 percent is high, but the general point is sound: Not many new apps manage to crack the top list without a lot of marketing help (an area that Streitfeld didn’t address but is no less crucial to success for the mom-and-pop developer than for the mom-and-pop restaurateur).

Meanwhile, the Times’ Brian X. Chen notes that the market is demanding more from independents like the Grimeses.

[N]ow that mobile app stores are overflowing with hundreds of thousands of options, consumers are leaning toward buying highly polished apps, and the market is no longer so friendly to amateurs.

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