Apple Doesn’t Have To Do Jack Shit

Look, I sympathize. I am one of you. I too rushed to ship an app to the App Store in 2008. I too have ridden the ups and downs of the Store. I too have a vaguely successful app if “vaguely successful” means it would provide an unbelievably good side income.

Unlike most of you, however, I’ve been at this a long time. I launched our current product in 1997 as a Palm OS application, have supported multiple platforms over the years, and at one time ran one of the largest mobile software companies. (That’s not bragging. The companies were actually that small back then.) I made the trial-and-purchase-for-a-fixed-price-plus-periodic-upgrades model work and work well for many many years.

But those days are dead, and, some tough love is needed here: THIS IS NOT APPLE’S PROBLEM.

Let’s say that together now: the dearth of many viable iOS indie dev businesses is not Apple’s problem.

It’s ours.

Whether we like it or not, the game has changed. Trials are out. They’ve been out for six years now and we have no idea if they are ever coming back. Upgrades are out, too. Again, we have no idea if they will ever come back. Ask yourself, do you really want to sit here and wait another 10 months to find out if we will get trials and upgrades, and then wait another three months after that to see it available? Hell, no. I need to make a living now.

It’s time for us to adapt.

It’s time for us to take a hard look in the mirror and decide whether we want to be in business or not.

It’s time to look in the mirror and say, in our best Jack Handy voices, that it’s us, not them.

The sooner we can come to the conclusion that it’s our problem, not Apple’s, the sooner we can move on to something more useful, like re-thinking our approaches and making a living.

“I guess it comes down to a simple choice, really. Get busy living or get busy dying,” said Andy to Red in Shawshank Redemption.

It’s time for us to get busy living.

I was particularly curious what Marco Arment would do with Overcast, his new podcast app. This category may be a hotbed for design but it sure as hell is not a hotbed for making money. Marco, for as many haters as he seems to attract, is no dummy. I am certain he knew this going in. What rabbit would he pull out of his hat, especially with some of the biggest brains in iOS development to discuss it with? No surprise, he tried something new for the category: freemium. Good for Marco.

This should be a lesson for all of us. What’s the old saw? Doing the same thing over and over with the same results is the definition of crazy.

Well, we are the crazy ones. We keep shipping paid up-front apps into the App Store and charging the same prices for them. How is that Apple’s fault?

It’s time for us to change and try something new. Would an app supported by ads work? How about free with in app purchase? Charge for individual features so power users can pay us more? Subscriptions? Or how about just raising prices? Multiple apps so you can cross promote? Move to multiple platforms? Build something useful on the website that people will pay for, too?

Can we take what makes these products unbelievable and get our biggest fans to pay us a little more, even pay us a little bit over time, so we can have a reason to keep devoting energy to these products we love?

Does this mean we may have to piss off a few of our existing customers to do it? Maybe. But losing an arm is better than dying. If we can’t make ends meet then we will all be exiting the iOS development game. We’ll be dead.

But it’s not like everyone has failed. The indie life isn’t dead yet. After all, if a few can make it work than a few more can make it work, too.

Personally, I’m not going quietly. We are working on a new mobile and web service, one that takes everything we learned about iOS and Android, about apps and our customers, about the way the app stores work, lessons from my many years developing our software, and I’m trying to fix two things: an even better product than the one my customers already love and a better business model that makes it feasible for me and a small team to support it full-time.

It took me a long time to get to this point. Frankly, too long. I would have gotten here a lot sooner if I would have stopped blaming Apple for my problems, stopped waiting for Apple to fix the App Store issues, and accepted the fact that there is incredible opportunity in front of me, one maybe unprecedented in the history of software development.

In order to capitalize I am the one who needs to change, not Apple.

Why Trial Apps Won’t Save Mobile Indie Developers

4 Ps

With all the discussion this week about iOS indie developers and how hard it is to make a living, I was asked whether trial versions would help developers out. My answer is that I am skeptical that it will help¹.

First, refer to the graphic above. This is the classic marketing mix as taught in every college for the past sixty years. In short the marketing mix has four pieces: the product itself, the price you charge, the place where it is sold, and what promotion is used to help people find it. It is often referred to as the 4-Ps.

In the old days of selling software, we leveraged all four of these components. We developed a great product at multiple price points with varying features, promoted it through partners, trade shows, publications, direct sales and various advertising campaigns, and sold it in as many outlets as we could. At one point or another powerOne calculator was sold via our web site, value-added resellers, retail stores, catalogs, online resellers and via other partners. We were particularly good at “place”.

Now, though, you have one choice for place and one choice only: the App Store². This puts insane pressure on the other components of the marketing mix. Because there is only one place to purchase iOS apps, everyone looks there. This means that outside promotion — short of a few well-read publications during the launch — fails most apps. Long-term the App Store is the only place to promote, and there isn’t much room for promotion there. A few pictures, a title, an icon and a description, soon a video, is all we get. It is very hard to differentiate any application with only that. And since differentiation is very hard, prices drop. In the end it is one of the few ways a typical app can differentiate: price.

Why don’t I think trials will impact revenues substantially³? Because nothing about this equation changes. There is still only one place to buy apps, and that one place puts pressure on all the other marketing mix components.

It does offer more promotion opportunity, though, my questioner pointed out. Won’t it mean that high quality apps will rise to the top and lesser apps that aren’t as good will disappear, making it possible that the high quality apps get found more and more in the future?

Maybe, but I’m skeptical. The problem is that the volume of apps in any one category is overwhelming and when supply outstrips demand as it has in the App Store, a minor promotional opportunity like trials won’t make that much of a difference. There are literally hundreds if not thousands of products in some categories, like calculators, note-taking apps, and task lists.

Even in niche markets like podcast clients there are ten or more solid choices. When one solid choice is $.99 and another solid choice is $9.99, the $9.99 app has to be 10x better than the $.99 app to even get consideration, and that’s hard to do among tens or hundreds of alternatives. A little 30-day trial isn’t going to be enough to make the difference for the “expensive” app. Thus the race to the bottom is back on, and indie devs still can’t pay themselves a reasonable rate to make it a full-time job.

¹ Although I hope I’m wrong.

² Android is slightly better but not much. There you have Google Play, Samsung Apps and Kindle Appstore, plus a bunch of smaller players that don’t amount to much.

³ And by substantially I mean enough to make a bunch of indie developers revenue successful when they weren’t before.

 

The One Who Owns The Customer Wins

Once upon a time software developers owned the customer relationship. We knew who purchased our software and could talk directly to them. We lost in mobile when the app stores became the only way to sell software because we no longer had a direct relationship with our customer. We had to jump through hoops to get responses to product questions, even to understand why a customer purchased and how we could get them to buy more. Apple and Google, the primary providers of app stores, owned that relationship instead.

Every industry has suffered. Why do musicians still make money from touring and, except a rare few, not from album sales? Because musicians can talk directly to their biggest fans through concert venues. It’s the only way for independents to survive and thrive.

When I think about the IBM-Apple deal, I only need the answer to one question: who owns the customer relationship? If it’s IBM then long-term the deal will fail for Apple. IBM’s ownership means they get to understand what the problems inside the enterprise are, they get to understand what additional things the enterprise needs and IBM gets to sell it to them, which builds a stronger relationship. If Apple owns the relationship then the primary benefits will accrue to them instead.

A friend who had worked at Apple during the time period told me a story: in the late 80s and early 90s Apple put lots of money into Aldus and Adobe and other companies focused on the desktop publishing market. This was not just in the form of investment but also in the form of co-marketing and promotion. By 1995, though, Microsoft came calling and despite the money invested by Apple, Aldus and the rest all jumped at the chance to prioritize Microsoft and their 95% market share. Apple was left holding the bag.

My friend told me this is why Apple has such a mixed relationship with developers. On one hand Apple needs them to be successful; on the other hand if any of them are too successful they could leave Apple holding the bag again. As my friend put it, Apple wants to keep developers bare foot and pregnant.

I think the lesson learned wasn’t that the developers could jump ship and leave Apple holding the bag. Instead it is that Apple couldn’t have anyone standing between them and the customer. Direct sales, Apple stores, staying in consumer markets, iTunes, the app store, these are all things Apple did on purpose to maintain their strangle-hold relationship with the customer.

This is Tim Cook’s challenge with IBM. Logically IBM has the customer relationship in this deal. After all it is IBM who have sales people standing inside the companies it is trying to sell. Did Apple give up too much control over that relationship or just enough?

Interestingly, this is also what all of us mobile software developers need to do, too. If we can wrestle back control of our own customer relationship, at least we have a fighting chance to succeed again.

Barnes and Noble Splits In Two

In their fourth quarter financial report yesterday Barnes & Noble announced it was spinning off its Nook business into a separate, wholly-owned subsidiary. My first thought was, “about time.” Barnes & Noble should have never had the Nook business as apart of its primary business. The only way to disrupt yourself at that size is to run the new business on its own, completely separate from the politics of the primary business, which in B&N’s case is retail book sales. Being an upstart, it is ripe to be squashed. Keeping it separate would have helped, or at least given it a fighting start.

The question is can the Nook business survive on its own? I don’t know. Many people made a bet on e-book readers already and bet Amazon. I did. Because of that decision, I make a concerted effort to buy books for only that device. On top of that, we have a couple of them around here, all linked to the same accounts. If my wife wants to read a book that I’ve read, she can just by downloading it from the Amazon store.

Then I saw this: “Any separation of NOOK Media and Barnes & Noble Retail into two separate public companies …” (emphasis mine). Oh, that’s not good. The Nook business has been blamed for years on dragging down Barnes & Noble’s earnings. It’s been a money loser. Instead of given it room to grow and then go public on its own, Barnes & Noble is attaching an anchor called quarterly filings to it and setting it to sail. I have a hard time seeing how it survives that.

The last remaining piece, of course, is the Barnes & Noble retail stores. Supposedly this is still a profitable business. I’m not surprised. Almost everyone else is gone except a few hold out independents (like Portland’s very own Powell’s). For many many people holding a book in one’s hands is still magic. We have hundreds of books in our house still, even after going mostly digital, although most of them are kids books. e-books don’t really cut it in many cases.

Is that enough to sustain a business? I’m skeptical but I guess we’ll find out. Apple has figured out how to make a physical business survive and thrive in a digital world. Can B&N figure this out, too?

John Day Fossil Beds

My family and I spent the past few days in North-Central Oregon in the John Day Fossil Beds. This is a part of the state I had never seen before and was surprised at how different it was. I have now explored most of the western and central parts of the state and am surprised at how diverse it is. I’ve easily seen eight completely different landscapes in those miles.

In the age of the dinosaurs, most of Oregon (in fact most of the US) was at the bottom of the ocean. 40 million years ago this part of Oregon was actually a tropical land not unlike Panama today. 30 million years ago massive volcanoes dominated the landscape. The mountains we know as the Cascades (from Canada to California, with peaks including Mt. Rainier, Mt. St. Helens, Mt. Hood, Mt. Jefferson and Mt. Lassen) migrated west. Over time the earth cooled and eroded and left an unbelievably varied and beautiful landscape behind just 3.5 hours from Portland.

Given enough time, everything changes.

I hope you enjoy a few photos I took, all with an iPhone 5s.

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