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.

Yesterday I gave a presentation at the Miami Design Meetup where I pointed out 8 things I think you should always remember while designing interfaces for mobile apps and websites.

Next friday the new iPhone 3G S will be available for sale and the iPhone OS 3.0 will be released. All this will have a huge impact on the iPhone applications’ market.

In-app purchases
This new feature will allow developers to keep making money even after selling an application and we’ll start seeing a lot of applications engineered to be expandable. Another (positive) effect is that it might “clean up” the iTunes store. Right now there are many applications that could be easily combined in a container application plus additional modules.

For my project Art for iPhone, in order to sell each individual artist, I had to release one application for each of them. Of course that made feel good the artist for having an application with their own name, but at the same time is much harder to promote the applications and to cross promote the artists.

In the iTunes store there are plenty of other examples like tourist guides or other applications that could work better if assembled in a single one. If I buy a tourist guide with the Italy module for it, next time I’ll have another trip I will most likely buy another module from the same application instead of going digging again between 50,000 applications to find another guide.

More power, less market
Yes, the new iPhone is an incredibly powerful portable gaming platform, and now software houses can start releasing games with even better graphics, but I don’t think they will go all the way with this. If they start releasing games that works only on the new iPhones they are cutting out a 40 millions devices market, and that would be plain stupid. So my guess is that they will wait until there will be more iPhone 3G S around, and that the iPod Touch will be updated.

Video support
A lot of application will have finally access to video recording. Right now the iPhone is the most used mobile device for uploading pictures to internet, also thank to a killer editing interface iMovie style.

I bet soon it will be also the most used device to upload videos. For sure there will be a massive number of updates from applications like Twitter clients, and that will make flourish a number of sites dedicated to short videos, space currently dominated by Qik, Seesmic and 12seconds.

GPS Navigation device
Thanks to the compass now the iPhone can finally be used as a full GPS Navigation device. this could be a big shift for all the GPS device companies out there as they will probably more software oriented than manufacturing hardware.

Do you think the iPhone 3G S will bring big changes to the mobile market? If so, how? Don’t be shy and leave a comment.

I’m planning to speak at BarCamp Miami 2009 this weekend about my experience with iPhone apps, hoping to help others to avoid mistakes I already went thru.
I’m not won’t talk about developing but more about how to make your iPhone application business profitable, or at least not burning money like a fireplace.
Actually probably more than answers I’ll give questions: questions you should ask yourself before starting the process of develop and release an iPhone application.

I asked in the past days on Twitter who else was going to talk about mobile and I found other two people, so we’ll try to give our presentations back to back, saving you to run all over the place if you are interested in the mobile industry.
This is what I found out about theirs presentations:

App Evolution: From Web to Mobile- presented by Alessandra Colaci

Synopsis: The current app market has a rich history that evolved from
early beginings on the internet. Insights into the market of today can
be gained from exploring the past trends from various earlier formats
ranging from widgets to social applications.

Alessandra is a the CEO of Republic of Wow!, the makers of Blixy.com.
With a history of success in social media marketing and applications,
she aims to be innovative and forward moving in developing trends and
markets. She speaks on various topics on social media, marketing, and
personal branding.

Rapid iPhone app development – presented by Auston Bunsen

How to leverage current skillsets as a web developer to write iPhone apps.

Last friday I went to a networking event and I met this lady who has a mobile marketing company.
When we start talking I was really interested in her opinion about mobile marketing because lately I’m dealing with several mobile projects, but after 2 minutes I understood she really didn’t get it.
For her company “mobile marketing” really means “text messages marketing”. They are missing it big time. Who cares about those impersonal text messages we receive once in a while about special offers?

I think companies should seriously start considering to tap those 35 millions iPhone users in the US, plus all the millions of people that already have different type of smartphones. Mobile marketing should be more about interaction and customer engagement, forget about cold text messages.

There are tons of possibilities with all these new mobile OS. Just think to a simple game where your product or your services are the main focus. Are you marketing some sort of soda? Just make a small app where the user can see drink recipes and maybe “mix” the ingredients right in the phone creating an iBeer effect. I guarantee you people will download it, people will use it and people will share it.

Do you get it now?