Software developers drop prices in Apple’s App Store (updated)

“Sliding software prices have damped the halo effect many music and software companies expected from selling their products through Apple Inc.’s (AAPL) iPhone software store,” Ben Charny reports for Dow Jones Newswires.

“Take, for example, game maker Jirbo Inc.,” Charny reports. “The Los Angeles-based company thought it would have trouble getting customers to buy an iPhone version of its popular ‘Break’ video game, which it had wanted to launch for $2.99 on July 10. That’s because it would be crowded in with 1,400 other titles, like ‘Super Monkey Ball’ and ‘iPhoneHome,’ some of which sell for as little as 99 cents.”

Charny reports, “So on Monday, Jirbo did what many other iPhone software writers are doing: It dropped its price by two-thirds… [Software makers are ] finding competition so fierce that they’re slashing prices. Over the last two weeks, prices on hundreds of programs were slashed,” Charny reports.

Charny reports, “The price cuts also could put pressure on Apple. Although the Cupertino, Calif.-based company sees the App Store as a marketing tool – it believes the more software that’s available, the more iPhones it can sell – the company still keeps 30% of every dollar spent on the download site. If revenue drop precipitously,the results may be more disappointing than initially expected on the business.”

MacDailyNews Take: That’s nothing more than misplaced “concern” that would not exist had Charny done a bit of homework: Apple CFO Peter Oppenheimer, July 21, 2008, during Apple’s Q308 conference call said that the App Store will generate some revenue, but it’ll be a small profit generator. “Just like iTunes Store makes iPod more attractive, the App Store exists to make iPhone and iPod touch more attractive to customers.” If anything, lower app prices make the iPhone and iPod touch even more attractive to customers.

Charny continues, “Apple isn’t limiting its sales to software programs. It also is selling full-length songs for the iPhone only through its iTunes store, the virtual record shop that helped turn the iPod MP3 player into the benchmark for the mobile music player market. Apple did that by linking all sales of online music compatible with the iPod to the store. In expanding that model to the iPhone, Apple is already generating a backlash. Music companies are locked into Apple’s platform, limiting the avenues for digital distribution.”

MacDailyNews Take: More ignorance from Charny. Apple’s iPhone plays MP3s (among other formats) which are sold by other online retailers. Music companies are in no way locked into Apple’s “platform.”

Charny continues, “Apple has ‘an iPhone choke-hold’ on mobile music delivery, said one music industry executive, who asked not to be named.”

MacDailyNews Take: See above Take. Music companies are populated by greedy sleazebags who fear Apple’s and Steve Jobs already-immense and rapidly-growing power, hence the stupid quote that the ignorant reporter regurgitates like an unprepared simpleton. Sometimes, we cannot fathom how these people get and keep jobs.

Charny continues, “Even if revenue from the App Store falls, Apple will be able to ride it out because it will become so popular and pervasive, said Gartner analyst Mike McGuire. “

MacDailyNews Take: Ride what out? See first Take (and last sentence of previous Take). The App Store exists to help sell iPhones, iPod touches and future products, not to generate a profit.

Enough. We’ll save you the time. Charny continues making mistakes while wasting a huge amount of words – yes, even more than you see here – to describe, drumroll please… capitalism at work in Apple’s App Store. There, we wrote Charny’s article in seven words, minus the hysterics, ignorance, and free FUD placement from music cartel slimeballs. Again, these price adjustments are the normal result of competition; pricing will find its collective equilibrium. Let’s give it a bit more than 4 weeks to get there, m’kay? Furthermore, it’s no surprise that developers aimed a bit high at launch. That’s certainly better than underpricing right from the start. It’s far too early for anyone to know exactly what price levels this new mobile apps market will bear. One thing is crystal clear: the more iPhone and iPod touch units that are sold, the more apps that get sold, so even if the prices are lower, the devs make more money in the end.

Full article, Think Before You Click™, here.

[UPDATE: 10:08pm EDT: Jonathan Zweig, Jirbo, Inc. Founder and CEO emailed us this evening with the following: “We couldn’t agree more with your take. Jirbo sees the App store as the biggest boon in mobile history and we love Apple for it. Our experience is actually the exact opposite, that is the iPhone Halo effect actually has reached us and in fact exceeded any of our wildest expectations. Our highest grossing app is actually our most expensive, Paper Football at $4.99 …The App Store is revolutionizing mobile. We have close to 2 million downloads in about 3 weeks. Around 60,000 of these are paid, a huge boon for our company. I’m hoping you can set the record straight that the App Store is providing companies with never before imagined distribution and revenue.”]

This article was originally published at 4:27pm EDT.

[Thanks to MacDailyNews Reader “PaKo” for the heads up.]

54 Comments

  1. I’m not sure how lower prices are hurting Apple. The developers are lowering prices due to competition. If you look at the incredible value that many free apps have, it’s hard to charge $10 when similar apps cost much less.

  2. > Who writes these “MacDailyNews Takes” anyways? U R an idiot!

    That must be the “idiot” Ben Charny himself… ” width=”19″ height=”19″ alt=”smile” style=”border:0;” />

  3. MDN’s Takes are snarky, that’s always been the case. This is an Apple fan site, so I don’t see what the problem is – as long as it’s not tooo nasty (as can be the case with Ballmer, heh)..

    As for the article, this is capitalism at work. Competition is fierce when demand is high and supply is high. This will eventually yield high quality apps at competitive prices for iPhone/iPod touch. It might be kinda scary right now, but it’ll be great for consumers and for Apple in the long run.

  4. The APP Store is new and with a new platform with limited storage (iPhone) many software companies are slashing prices to be first and own as much market share as possible.

    Sort of the approach used by Dell, flood the market with cheap PC’s just to increase market share and force everyone else out and make the high end market pay more.

    Apple doesn’t play the low ball, stripped down computer market to increase market share.

    But if they did…it would be the end for Microsoft for sure.

  5. We must also consider that a lot of these developers are testing the waters with their applications. Most of the stuff on the App store is junk right now. As those products fail to yield any profits, developers will be forced to expand their knowledge of the SDK and what the iPhone/Touch can do. Better applications will arise, and the crap will fall away.

  6. As an Apple Customer MAC software has always been more expensive then the same title for Windoze. Not because the market was that much less crowded, it has to do with competition, Software developers didn’t care what the market was like for Mac OS software because the assumption as always been that there was no competition so, they could sell the Applications for a higher price and not lower the price of the App. The iPhone App store pricing shift is what happens in the PC Winblows software market all the time. It’s a dog eat dog world out there people – get used to it.

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