Since the majority are free or 99 cents, how will the economics ultimately work out for the people that develop them? For one, host companies like Apple don’t care and aren’t even focused on the standalone business. 300M last quarter (and growing) from its 30% cut of app downloads. Despite it being truly a meaningful number, the hardware sales powered by the App Store is what’s most critical to them.
5.8B in 2012. In the long-term, these companies should care. In the event that you charge a 20% interest to loan money and no one can pay you back, how will the party last long? How exactly does this translate to the typical designer? 4.5x), and Apple’s trim, it nets the average developer near to about 23 cents per application per user.
I’m not sure what business model may survive on 25 % a sale but certainly there needs to be more behind it for the channel to thrive. If you are a developer for corporations, no matter. Schwab and Fidelity are using applications for customer retention and account access. Pepsi uses it to construct brand loyalty.
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As with most marketing costs, traditional media dollars are moving to more relevant stations with mobile apps being one of the fastest growing. I would surmise that a corporate app designer is one of the hottest careers around right now. But what about the people attempting to make a living or a business?
Jeff Bezos built a website and they emerged; can that happen in the mobile application world? Certainly Instagram was a financial success, but only because they sold the promise (eyeballs versus cash flow). The other people that are collecting a 23-cent toll because of their niche app won’t stay permanently. Ultimately, the crowd of creativeness will dissipate unless they can find a real way to make it worth their while.
You can easily see similarities in the blogosphere. There used to be thousands of people writing their thoughts in hopes to generate income from it in some shape or form (present company excluded of course). Many have turned off the lamps and went back to diaries. Only a few blog sites have really generated a significant following. And despite having sites like Huffington Post or Seeking Alpha, I doubt they are tremendously profitable. There are most likely a few niche businesses in the blogsphere, but there is absolutely no Google. So will Apps turn into a cost center as many creative things do just? Areas such as gaming and micro-transaction based models are gaining steam.
I imagine affiliate marketer programs from FB and other mobile business efforts will continue steadily to add big dollars to the pie in the same way it did on the net. Perhaps it is prematurely. In the cycle for a sizable scale disruptive business model to have emerged. Just as much as the man is wanted by me who created the tongue salivating Ilickit make a living, I would be better off with a couple of stocks of Apple.