The Case For Weakening iOS App Store Sales

We have seen a pretty significant drop in sales over the past 12 months. I spent much time first beating myself up over not adjusting faster and then forgiving myself and trying to understand why it occurred. I have come to four conclusions of what could be impacting our sales:

Increased Competition: We were, for the longest time, the king of iPad calculators but the number of apps available specifically for iPad has increased over the past year. [1] In particular, HP launched its 12c version specifically for iPad and we worked with DEWALT to build a version for construction, eating into our finance and construction sales. This caused a little softening in the second quarter but wasn’t enough to make us worry. We did play with pricing in the summer to see the impact, something I still mean to write about here. The bottom line on that one: more unit sales, less revenue, not worth it.

App Store Changes: With the release of iOS 6 in October, Apple changed the App Store’s presentation. I think this had two effects: 1) it emphasized apps named the same as their search terms and 2) changed how far into any search results a customer was willing to go. For the former, apps named “checklist” or “calculator” are overemphasized in the App Store as those are terms people search for. In our case, almost every one of our powerOne apps has a competitor named by the search term: mortgage calculator, finance calculator, scientific calculator, etc. Since Apple emphasize exact name matches, these apps always end up at the top of the list. Regarding the latter, the shift from a list of apps to cards means customers don’t look at more then the first couple of apps. Previously it was easy to look at 25 or 50 options quickly. (Image from VentureBeat.)

Shift to International Markets: US smartphone market penetration now exceeds 50%. I believe this means that products primarily geared around the US market will see slowing sales. Apps who have broad appeal beyond US borders should do better, although Europe too is at or near 50%. powerOne apps are heavily geared around both US mathematics and English language.

Shift to Consumers: I also believe we are experiencing a shift from professional customers to consumer ones. The earliest adopters of iPhone and Android smartphones were, logically, professionals. They could write off the price of the expensive phones plus had the most need to carry portable computers in their pockets. They were also trained for years by Palm and BlackBerry to think about pocketable computing. Our products are heavily geared toward professionals, many of whom have already bought a powerOne product. As the new smartphone buyers become more consumer-oriented, there is less need for productivity apps and thus our sales weaken, even as the entire App Store’s sales escalate.

This, of course, is all speculation. There is no way of really knowing what has happened. If I was a betting man, though, I’d bet on a combination of these factors.

[1] I couldn’t find a 2012 number but there were 60,000 iPad specific apps in January 2011 and 275,000 in October 2013.