Davide Di Cillo

The great Fast Company crap

Friday, September 3rd, 2010

This post wants to be a response to the article posted on Fast Company “The Great App Bubble,” in which the author base all his statements on stats taken out of context.

One billion dollars in revenue for the approximately 225,000 apps is $4,444 per app–significantly less than an app costs to develop.

Sure, this would be true if those revenues were equally distributed to all developers. This statement doesn’t keep in mind that there are thousands of crappy apps out there that don’t make a dime and applications that are developed once and republished several times (think all those travel apps where they publish a different one for each city). In the latter case even if the statement were true, I wouldn’t mind making $4,444 one hundred times over.

A typical iPhone app costs $35,000 to develop.

I really really wish this statement was true, especially because that’s what we do primarily at 39 inc.; I also wish that was the typical price we charged for the applications we build. Some applications could really be expensive of course, especially if you factor some server side programming as well, but of those 250,000 applications, I can guarantee you that 220,000 of those apps didn’t cost more than $7,000 each.

iPhone users don’t find their apps very valuable. In 2009, analytics start-up Pinch Media reported that people barely use the majority of apps they download. Only 20 percent of consumers utilize a free app the day after they download it. By 30 days out, less than 5 percent of consumers are still using it. Paid apps (page 13 of the company’s fascinating 33-page slideshow) have a slightly better performance record, but they still get hit with a steep drop in usage within a period of 11 days. The value of most apps may be in satisfying the curiosity of what the app can do, not in its usefulness or relevance in a user’s daily life.

Sure, free applications are often downloaded just out of curiosity, games are usually discarded once finished and nobody is arguing that there are a great number of disposable apps. So what? I don’t see any problems with that. As a developer you can you can make tons of money building disposable apps as well as building a long lasting success like Tweetie or Instapaper.

Marketers are spending money on iDevice apps at the expense of improving their mobile Web sites that everyone with a smart phone can access. According to Ahonen and Moore, iDevice app development actually costs 10 times more and reach is 50 times worse. Sex appeal will only trump pragmatic reach for so long.

I agree, a lot of websites should definitely try to improve their mobile website or at least make sure that the mobile experience isn’t inferior to the desktop one. But that doesn’t mean you couldn’t also offer a native application for iOS, with performances and experience far superior to their web counterparts.

Venture capital is flooding into the app economy in spite of the questionable ROI proposition.

Go tell that to the people who invested in Tapulous or other successful mobile development companies. That’s how venture capital works anyway, they do ten investments and maybe a couple of those will be successful enough to pay for the other investments and still make a profit.

Steve Jobs has said 15,000 apps are submitted to the App Store each week. With this many apps to sort through, finding new, useful ones to download can be a painstaking task. Then on my phone, if I want to find an app I don’t regularly use or a new one, I need to use the search function to find it. Can you think of a faster way to get information? The browser. Once mobile Internet gets faster, apps as the key to on-the-go information and tools will be on the outs..

I suppose that for the author it’s easier to find a web application between millions of pages than a useful apps between 250,000 ones. He seemingly forgot about word of mouth, blogs, social networks and all the others ways that will always let the cream raise at top.

In conclusion, I can say that building a business solely based on mobile development isn’t as easy a task as some successful stories may infer, but definitely mobile apps are not a bubble. They could be part of a cycle for sure, where at one point they will leave their place to other things, just like other things do, but there is a big difference from being a bubble.

Tags: iOS, iPhone application, Mobile
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