The App Store as we know it involves a catalog of well designed applications, games, utilities, pumped with a whole lot of crap. Not a week goes by when we don’t receive a review request for an app so hideously designed, we can’t help but snicker behind the scenes. I won’t name any.

By by and large, the App Store has been a success, for Apple, the developers, and the users. Apple makes a few millions from their 30% cut but in turn sells a truckload of iPhones in the bargain. The developers get an easy way to reach users, something unheard of on a mobile platform. And the users are just spoilt for choices with thousands of apps at throwaway prices. Even Indians find them affordable!

But there’s a general consensus that the App Store’s drive to the bottom is hurting everyone. Developers complain all the time about selling apps for 99¢, which brings me to tap tap tap’s John Casasanta’s blog post on their App Store business experiences¹.

Developers seem to be of the mindset that being in the App Store is a black & white issue. Meaning that if you’re in, your app MUST sell for a few bucks at most and it’s a failure if it’s not in the top 100. And worse, Apple should be doing all your marketing for you. […]

There’s absolutely no reason why the App Store can’t support both the traditional and the hit-driven model. If you’re not going to go with the hit-driven model and do it with a full commitment, then it’s likely in your best interest to RAISE your app prices to what people have been used to for Mac software.

He says that if the developer chooses so, they can sell the app at a much higher price (but lower volume) effectively making the same amount of business as they did on the Mac platform. I was of the same opinion a while ago, but I’ve realised that the App Store is a totally different game from what we’ve seen before. Take note that I’m not a developer, and I don’t have any apps for sale at the App Store. These are just my observations from the stands.

Two different markets

There is a big difference in the way iPhone users approach applications. Unlike the Mac marketplace where one sees the app in Safari, downloads a trial, and then pays for it, iPhone users buy apps from their iPhones, so the ‘Featured’, ‘Top 25’, and ‘What’s Hot’ are all that they look into. Even on the desktop, if say you click a link to the App Store from a recommendation on twitter. You look at the app, but inevitably, you click the “Home” or “App Store” link to see what’s new and popular on the App Store. Now with categories missing from the sidebar, it’s only what Apple chooses to advertise in their hot selling apps. Users rely on these recommendations from Apple to make their purchase. Sure a review on Smoking Apples will get the app some more publicity, but we can only do so much (there’s 50 million iPhones out there remember?).

Competition

Unlike the Mac marketplace, where apps generally tend to have their own identity and feature-set, iPhone apps are sometimes carbon copies of one another. Unless App Store developers collectively increase prices, there’s no way a $10 app will sell when a 99¢ app does the same thing. It may work for OmniFocus and Things because they have desktop tie-ins (as well as brilliant code powering them), but for a lot of apps like Twitter clients it’s about giving the user the best deal. It’s evident from the fact that Convert itself was priced at 99¢, the same as Convertbot from Tapbots (which in turn went free for a limited time to create some buzz). Both are quality apps (along with Polar Bear’s Convert), so which one’s to be man enough and raise the price to $3-$5?

Cheapness is key to the App Store’s success

Imagine if most apps costed $20-$50. Would you really find yourself browsing the store in search for a cool game? It’s the possibility of finding something really cool at a dollar or two that makes the App Store a compelling launch. iPhone apps also have a shorter ‘age’ than desktop variants. You can’t imagine playing the same game for more than 3 weeks, because there’s limited scope for expansion so the cheaper price point makes it easy for the user to buy more and more apps and games without feeling the pinch to the wallet.

Lack of trials

This one’s totally in Apple’s hands, as it’s hard to decide if you want an app without having a trial version. Screenshots (and even videos) only tell you so much. So what’s to say that $20 app is actually going to be worth it? How many of those OmniFocus users are completely satisfied and don’t regret their purchase? This would also be able to tackle the ‘competition’ aspect of the Store. For the user browsing the store, a $1 newsreader is quite the same as a $5 newsreader until they actually use it. And for most part, they will be satisfied with the $1 newsreader (not knowing how awesome the $5 one really is). Games are highly subjective, and you can never go by screenshots or reviews on the Store. If Apple enables app trials, the whole business model will change.

There’s a lot of things still broken on the App Store (approval process, crApps come to mind), but my view is that the App Store’s current business model is fine as it is. It’s moving a ton of apps, getting new users by the million, and making (almost) everyone happy. /end rant