Beware The Giant Footsteps

I would say that the hardest thing about being small is staying out of the way of giants. This was my persistent thought after hearing Steve Jobs’ WWDC keynote speech Monday.

For starters, Apple (and Google and Microsoft, etc.) integrate features that used to be available only by third-party products. Remember the Milk will be replaced for many by Apple’s new Reminders app. Instapaper will be replaced for many by the new Safari Read Later feature. 200 new features each year mean lots of big and small apps, that used to do something for their customers and drove revenue, will now either be obsoleted or be searching for higher ground.

As the maker of very fine calculator apps for iOS devices (and before it Palm, Windows Mobile, Windows and BlackBerry), I have first-hand experience with this problem. In the beginning there was a simple four-banger (plus, minus, times and divide) calculator bundled. Then scientific functionality was added. Then, like on BlackBerry, currency conversions and tip calculations were added. As a developer of competing apps it has meant a continuing hike toward higher ground — algebraic and RPN entry, specialized settings, specialized calculations — that also made our product more niche, more designed for power users. And this has also meant, with app store pricing, lower and lower revenues from said products as our niche of customers looking for a power user product has shrunk. [1]

This doesn’t mean that Reminder apps and Read Later apps can’t survive and do well. After all, the market for those kinds of apps with speciality features are likely larger than the group of people looking for a high-end calculator. But competing with Apple is a losing proposition and these developers need to know that Apple just swallowed 60-80% of the existing users with their general purpose, bundled apps.

This isn’t the only being stepped on by giants moment I had Monday. The other squishy sensation focused on business models. In my time in mobile, productivity app revenue has shifted substantially. It used to be $20-50 for the app, $10-30 for an upgrade. Not only is the upgrade revenue gone but so is the high price points. Now $5 is expensive and $2 is the norm.

So business models have been shifting. Many productivity apps are now free to use or free to try and then charge money through web-based subscriptions. Apps like DropBox and Evernote, as two examples, utilize this business model. The big selling point: move data between platforms quickly and easily, have it backed up in the cloud so you don’t have to worry about failed local computers, and gain access everywhere.

I heard a shot across the bow of this business model, too, on Monday. With Apple’s new iCloud storage API any app can back up to the cloud and have instant access to everything on all devices and systems. There are even API hooks for Windows and Mac. Apple, of course, integrated this feature into a number of their own apps and the entire feature is free to both developers and users. I am concerned that the expectation now is that this capability, previously a big seller for apps that wanted to charge a subscription, is free and another business model, for appropriate apps, will go by the way side.

It is too early to tell whether this is the case but it seems, just like apps who have bundled counterparts are constantly searching for higher ground, so are mobile apps with web counterparts doing the same. Only in this case it isn’t the low-hanging features that are endangered. It is the entire business model.


[1] Rule of thumb: if you find it in Mac OS X you will eventually find it in iOS.