Android Unlocked, Carriers Locked Out

There’s been a meme going around the Internet recently about how rich people are the beta testers for the rest of us. The example most people pull is from the movie Wall Street. The scene is Michael Douglas walking around the beach with a big honkin’ cell phone in his hand.

This is true for far more than just technology though. My wife and I have been watching Ken Burn’s documentary National Parks: America’s Best Ideas. Rich people were the first to go to national parks, too. The train ride was expensive, the time was not there for normal people, and even getting into the park was insane. In 1890 it cost $40 to get into Yosemite. That’s the equivalent of $1500 in today’s dollars. (For the record, it costs $20 per car today.)

So when I saw the news that Google was expanding the number of devices they will sell direct with a standard version of Android installed on it, this is exactly what I thought of. In the coming weeks, the HTC One will be available this way, the Samsung S4 will be available this way, and the Nexus 4, Nexus 7 and Nexus 10 already ship this way.

Why do we care? Because Google is quietly building a collection of devices that customers can buy off-contract and with the standard Android user interface experience. These devices are also immediately updated to the latest version of Android when it ships.

Sure, $650 is a lot today compared to the $0-200 we pay on-contract, but that won’t last long. As prices drop to $200 or $100 over the next years, I suspect more people will opt to buy these devices directly rather than through a carrier and on-contract. This will give us constantly updated devices without all the garbage on them? Sign me up!

New Tech Means New Winners

Chris Dixon wrote a very smart piece on mobile this weekend. A lot of the things he talked about are things I’ve talked about. One I haven’t talked about as much, but have been thinking about, is based on this excerpt:

If you go back and look at the history of productivity apps you’ll see that each major user interface shift led to new classes of productivity apps.

Actually, each generation of technology has meant a new winner, not just new apps. In the hardware days, it was HP calculators. In the DOS prompt days it was Lotus 1-2-3. In the mouse days it was Excel. Something will dominate in the touch era.

Same is true for word processing. In the DOS days it was Wordperfect and in the mouse days it was Word.

Replying To Google Play Reviews Do’s and Don’ts

Google announced that developers can now reply to reviews in Google Play, Android’s app store. I thought I would add a few Do’s and Don’ts for us developers to consider. For instance,

DO reply to correct facts.

This is worth doing. A customer says your product doesn’t have feature XYZ and you respond, saying it does and how to find it. I would highly suggest being very polite about it, though.

Another one,

DO answer feature requests.

A lot of customers will request features through the review system. It is a great use of the reply option to tell them the app is adding this with the next release or that you will consider the suggested change.

As a corollary, though,

DON’T tell the customer a feature is coming and then fail to follow through.

If you fail to follow through, you are now a liar and the customer will feel obligated to tell everyone in all reviews moving forward. Not much worse than this.

Oh, wait, there is something worse than this,

DON’T argue with customers over opinions.

A spitting contest won’t do you any good and you can’t argue with the customer anyway. Others will just read it as argumentative. Or as John Moltz points out, “This could end up being [your] opportunity to go from being labelled ‘developer of lousy, one-star app that should be free’ to ‘asshole developer of lousy, one-star app that should be free’.”

Since I like to be positive, let’s finish off with this one,

DO wait before posting.

This is the “don’t be an idiot” rule. (Okay, that wasn’t very positive.) People say rude things, especially when there is a cold-hearted company on the other end. After all, to them there is no difference between Microsoft and a sole proprietor. It is easy, as someone who has sunk heart and sole into the product that is now being ripped apart to rip back. This will end badly. So write that response, read it over a few times, chuckle to yourself regarding your witty repertoire, then delete it. Trust me, you’ll be better off to forget this one.

The Future Is Subscription For All Productivity Apps

To back up my comments about paid apps being dead, Ben Thompson writes about Adobe’s business model switch. [1] (If you missed it, all Adobe products will forever more be subscription only.) His point is that the economic surplus of productivity apps makes them far more valuable then the prices charged so a switch to subscription makes a ton of sense (for all productivity apps, not just Adobe).

(He makes such pretty graphs.) Ben’s comments:

The challenges facing Adobe are shared by almost all productivity apps.

  • Productivity apps are indispensable (and thus priceless) to some users
  • Productivity apps usually have high learning curves
  • Well-done productivity apps require significant investment up-front
  • Productivity apps require regular maintenance and upgrades

Unfortunately, app store economics don’t really work here.

  • If you have a low price, you need massive volume to make up for the upfront costs
  • If you have a high price, users are much less likely to buy your app, especially since there is likely a learning curve
  • If you can’t monetize over time, your users are extracting MUCH more value than you are receiving in revenue. That’s great if you’re a user, up until the company you love sells out because they can’t make money. Sparrow is the canonical example here. How many Sparrow devotees would gladly pay $5 a month to have the app available and continually updated?

The challenge here — and I think this is a huge challenge for Adobe — is that I’m not certain the traditional software apps can make this transition. Take Quickbooks for example. $20 per month gets you access and store your data with Intuit, and that price doesn’t even include everything the Windows version does for $100. Does Intuit make more? Sure, but it leaves me feeling bitter that Intuit is trying to extract $480 worth of value for what used to cost me $100. [2] My general feeling: over my dead body.

I have a hard time believing that my customers would accept paying even $20 per year for powerOne, even if it was available on all platforms and the web, synced templates and more. [3] powerOne is designed as a “buy one time” product, like almost all productivity apps of yesteryear. It’s not my customer’s fault that that product is now priced too low to support my company. That’s app store dynamics at work.

Re-thinking the product to go along with the model change is imperative.

[1] If you aren’t reading this guy, you should be. Amazingly good writer and thinker. Haven’t been this blown away since Horace Dediu at Asymco appeared on the scene four years ago.

[2] Most people I know only upgrade every couple of years.

[3] In fact I know I’d lose most of them. We asked about advanced features for even $5 per year and had very few takers.

The Market For Paid Productivity Apps Is Definitely Dead

Marco Arment linked to a blog post and commented that paid iOS apps are not dead:

In most categories, if you either solve a new problem that a lot of people have, or solve an old problem in a new and better way, you can sell a paid app today just as well as you could in 2008. In fact, the market is much bigger now. But, as with any maturing market, you’ll need to do more to get noticed since so many problems have already been solved so well.

Bull, unless of course you make games. Apps — of the productivity persuasion — are indeed dead. If you can’t make a living, what’s the use. In 1999 Palm sold 6 million units. Infinity Softworks, in its first full year of sales, sold $200,000 worth of software. That means we made about $0.03/device sold. I was breakeven and made a living for myself. In 2009, our first full year of selling iPhone apps, Apple sold 20 million units. We brought to the table a decade of customers moving to iOS, an App Store in its infancy (less competition), and an app far more capable then anything I wrote in 1999. We made about $50,000, or a very pathetic $0.0025 per device sold. Yes we have had more success since mostly because we were involved with the iPad launch, but not one of these years has approached our peak Palm years. (1999 was not our peak.)

In other words, not only is there no market for paid (Android and iOS productivity) apps [1], there probably never really was. The occasional hit comes and goes, but the peak is too short lived to sustain a reasonable productivity app. A few of those early apps (like Instapaper) had staying power, but there were precious few of them, and far less than in the Palm/Windows Mobile days, especially when you consider how many more devices are being sold now than before.

[1] I want to be very clear here. I am talking about one-time purchase productivity apps, the kind where you buy the app and use it. In the old days we sold those apps and then sold upgrades. I believe the market for productivity tools is moving to subscriptions.