The Case For Weakening iOS App Store Sales

Posted on January 8, 2013 by Elia Freedman

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.

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[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.

Making The Most

Posted on January 7, 2013 by Elia Freedman

I spent time this weekend pulling apart old photo albums. We’ve already digitized our music and movie collections. Photos are next.

This story starts with me leaving South Florida, where my mom and stepdad moved me and my brother in 1988, to go to the University of Cincinnati in 1991. I was to study engineering, a silly choice for someone who spent all his high school free time writing code. When I got there I knew absolutely no one, was still five hours from my dad so had no support structure, and basically was in shock, completely alone. I ended up meeting some guys that accepted me, they were in a fraternity, so I joined, another very weird decision for me.

The next school year I moved into the house and lived in a variety of rooms during that time and took a variety of jobs, including cooking on Tuesday nights. (I had never cooked a meal in my life before that but I didn’t make anyone sick so I must have done okay.) In the spring of 1993 I was elected treasurer and did a solid enough job. I really enjoyed the job and was part of my decision to switch from engineering to business. My big claim to fame is that I filled the house for the summer, making it profitable. That had never happened before.

Except it was really hot and there was no air conditioning. I couldn’t stand it and, one day, went out and found an apartment with air conditioning and moved out.

It was a really stupid decision. Yes, moving further from campus was a silly decision as I wasted tons of time driving back and forth to my apartment 20 minutes away. But moving out of the house meant I had to relinquish my role as treasurer. For the first time in my two+ years at Cincinnati I finally was fitting in, being apart of the team, learning how to manage peers. And I moved out, gave up the role. I’m sure I annoyed a bunch of people, especially since I did it with no notice.

I was flailing around so badly, looking for something but not knowing what I was looking for. In the next few months, a long-term relationship disintegrated, I dumped the apartment, dropped out of school, packed my car with everything I would keep, and drove through a blizzard back to Florida.

Pulling those albums apart, looking at those pictures, just made me think about what a silly, impulsive decision it all was. It was incredible training for running a company, leading peers. I threw that all away over a hot spell. It reminded me of something I haven’t forgotten since: make the most of every situation, even if that situation is a bad one.

The Innocent Man

Posted on January 4, 2013 by Elia Freedman

We all took the week from Christmas to New Years off. I’m not certain I’m refreshed — 2012 was a very tough year — but I did get a bunch of things done around the house. One thing I got to do was a lot of long form reading. I’d been saving a few articles for the end of the year. I read a lot. It’s one of my favorite things to do, actually, and consider it my primary hobby.

Probably the best article I read the entire week was about a man who was accused of killing his wife and sent to prison. There was lots of evidence at the time pointing away from him but those leads weren’t followed and the DA, aggressively pursuing higher office, railroaded him. Michael Morton spent 25 years in jail, finally freed thanks to The Innocence Project and advances in DNA technologies. The article from Texas Monthly called The Innocent Man is long — it’s split into two parts — but so amazingly compelling I couldn’t put it down. Fantastic writing, incredible story, and, luckily, justice in the end.

Apple’s Original iPhone Was A Minimum Viable Product

Posted on January 3, 2013 by Elia Freedman

Glenn Kelman, CEO of Redfin, wrote a post at Techcrunch a couple of days ago lamenting the lean startup movement and the minimum viable product (MVP):

The problem with this paradigm is that it isn’t always the best way to build disruptive technologies, which, as Michael Arrington noted yesterday, lately seem in short supply. How many big ideas “failed fast” and were discarded just because they were half-finished?

If Steve Jobs had shipped the minimum viable iPhone, might we have concluded that people preferred a keyboard? If Tesla had manufactured the minimum viable car, would anyone still be driving it?

Maybe the reason we don’t have big ideas is because our entire approach to building them is sometimes so frugal with time, money, and belief. Lean startup techniques have revolutionized how we build software, but the lean startup has also turned the a startup’s only initial asset – the conviction that an idea will work — into a villain rather than the hero. This is why we so often see startups pivot rather than persevere.

The lean startup movement is often taken to extremes. The point is to develop the minimum product necessary to start conversations with customers. Lean startup is not a one-size fits all. It’s a determination, a very hard one at that, by the founders of the business.

Since Glenn brought it up, let’s talk about the iPhone’s first release. Glenn suggests it was not a minimum viable product. It was.

Here’s a device that had a limited number of apps, no way to load more (except as browser apps, which few were going to do), no copy and paste, no notifications, no connection to an Exchange server back-end. The entire product was a MVP trial balloon and it is easy to discern the hypotheses. Would people be okay without a keyboard? Would the full Internet really work on a portable device? Could we charge a full price for the device so we can minimize the carriers? Can we get carriers to allow us to be the ones who distribute the OS? Will people accept the phone as an app? Will people accept using the browser for apps instead of loading them onto the device like every general-purpose computing platform before it? Will people prefer to carry a single device that does everything over distinct devices like iPods?

To some of these the answer was a resounding yes. Phone as app in exchange for a full screen browser that acts like a desktop browser? YES! Single device for carrying music and have calls and messaging? YES!

And to some things the answer was no. Full-priced device? Apple issued a credit to early adopters within a month or two of shipping. It was clear Apple was going to have to follow the US standard of subsidized devices. Apps loaded onto the device? A year later we had the App Store because it was clear the experience of making browser apps wasn’t enough.

Apple used the initial iPhone to start a conversation with customers. They saw how customers were using the device, they talked to customers on tech support and watched what they posted on forums, and of course Apple leveraged the Apple Stores for detailed insight.

A minimum viable product doesn’t mean the smallest possible product, made the cheapest possible way, in the shortest amount of time. It means the minimum app that a customer will find exciting, be willing to use, and acts as a catalyst for conversations about what could be better. Sometimes that is a simple product and sometimes it takes years to get there.

A Look Back At 2012

Posted on January 2, 2013 by Elia Freedman

In 2012 I wrote 251 posts, bringing the total post count on eliainsider.com to 477. This is the first year I tried to write each work day as previously I wrote once per week. There were 261 weekdays. If you discount holidays and vacations I exceeded my goal, although there were some days I wrote more than once and some days I didn’t write at all.

Of those 251 posts, 11 were added to my favorites list bringing the total to 36. I find it interesting that I wrote 52% of the posts on the blog in 2012 but only added 30% more posts to the favorites column. Either my standards for high-quality topics and writing increased or I wasn’t as diligent as I used to be in marking favorites.

According to WordPress, my most read posts this year (not necessarily written this year) were:

My personal favorites, in start to end of year order, were:

Interesting that all of you seem to prefer my practical, mobile posts while I personally prefer my theoretical, humanities-oriented posts.

So we start 2013. Here’s hoping it’s better than 2012. Here’s hoping every new year is better than the one before.

Elia Insider

Inside the brain of a software company founder.