“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.]
I just took my first real look at the app store. There certainly is a lot of crap there but there are a lot of programs which, if the developers got them right, can be amazing productivity boosters. And when you see what some of them are doing with the accelerometer and the multi-touch functionality, well, I kept finding myself going, “Okay, now that’s just cool.”
Is Apple doing the right thing by only allowing people to distribute their apps at the app store? I’m not so sure. I would rather see some competition. If Amazon or Best Buy were selling the apps online and could provide a better user experience for purchasing, or a better agreement with developers than giving them 70%, or whatever, then shouldn’t they be allowed to try? Sony doesn’t restrict PlayStation games to being sold by Target, so there’s at least a modicum of competition between them and other retailers and the buyers get to choose where to buy.
Just a thought.
Oh, and handsome Smitty, look up the definition of fud, dude, cuz you is spreadin’ it thick.
The comment:
“It also is selling full-length songs for the iPhone only through its iTunes store”
is just so flat out ignorant, I don’t know where to begin. Has this guy ever even touched a computer, used an iPhone/iPod, played with iTunes or seen the electric light bulb?
“Is Apple doing the right thing by only allowing people to distribute their apps at the app store? I’m not so sure. I would rather see some competition.”
Yeah, let’s see more competition on all those FREE apps.
The problem for developers looking to make money is that there are a lot of developers who want to make a name and give there app away for free. Who’s going to buy even a 99¢ flashlight app when there is a free one just as good.
Look, the Free-app writers are going fade away to some degree, and the really talented developers are going to learn what the market will pay for those talents. They will have to decide if the sales receipts warrant the effort. I would say by the plethora of apps coming online that producing applications for the iPhone must not be too hard.
@Mel Gross
Gross sMel?
too easy!
Charny – as in Blarney.
You two are such easy targets, I think you might be related… Hmmm…
That’s pretty stupid. Even someone as dense as yourself should realize that.
Cartoonasaurus,
Poetic justice?
Mel Gross,
Just in case, I was referring to Cartoonasaurus’ poem higher up.
I figured. I hope no one is giving that other one any serious thought.
“Sometimes, we cannot fathom how these people get and keep jobs.
MDN stop it! You’re going to blow my cover and wreck a good thing!
“Gross sMel?”
@Cartoonasaurus
Are you four?
“virtual record shop”
Hold on, is Apple making anyone lower prices?
If not, and they’re not, then the market is adjusting to demand.
If nobody wants to pay $10 for Frogger™, then they won’t sell any.
If a million iPhone users would pay $2 for Frogger™, then they have a winner.
What’s so hard about that?
The elephant in the app store that is rarely mentioned is the lack of trial versions. I’ll only buy a few items – no matter how low the price – if I am disappointed in what I get. How can I know I’ll like it if I can’t try it?
The Apple stores let you – encourage you to – try the products as much as you like. iTunes let’s you play part of a song to see if you like it.
The app store has a screen shot or two and some marketing hype. Not at all the same.
So, why no trial versions?
DanieIN is right on.
I have to say I have not bought any apps. Just got the free ones. There’s no way I’m spending even $1.99 just to find an app stinks. Give me a 1 week trial, heck even a 1 day trial would be enough to see if the app is any good.
So why no trials? And who could provide an intelligent answer to that question?
App store is relatively new. Still shaking itself out. Give it time. It, the developers and the marketplace will work this all out.
C’mon Mel, Nick, you can make fun of my name all you want – I won’t run home to mommy-saurus!
Cartoonasaurus – more like C’mon-you-dumbass!
or
Bend over, Corn-hole-a-sore-ass – take it like Nick Fury would.
or
????
I’m waiting…
Hmmmm….. How would Nick Fury take it? The mind reels…
The update from Jirbo is stunning. Just goes to show what a hoser the author is.
What is the deal with you people and “trials”? As of my last count, there were 30 “lite” versions of programs which you could try to your hearts content for free forever. Isn’t free forever better than free for 30 days? There are lots of other free software programs not named “lite” with for pay equivalents. I’m not going to take to time to look them up for you. But maybe you all should take a look at these programs before you whine and moan about no trial version.
Definition of winer: anyone who wants something I don’t want.
Wow, 30 lite versions. Out of how many apps?
But of course trial versions aren’t necessary. That is why so few desktop applications offer them.
Come on, even apple offers trials of things like iWork.
[what is there about MDM that brings our the cynic in me?]
UPDATE: 10:08pm EDT: Jonathan Zweig, Jirbo, Inc. Founder and CEO emailed us…..
send that to Charny please..
beautiful
STFU Cartoonasaurus.
Anybody who complains at $4.99 for an application has got rocks in their head.
As any developer knows, to design and write a reasonable quality application is usually a good piece of work and takes quite some time. Yes the market is adjusting as it always does but does anyone hammer Oracle or Microsoft or SAP because their applications cost more than $1.99 no way. And that is how it should be.
I hope with the App store the good apps find a level above $10 and the c**p apps find a level so low they cannot even give them away.
As for trial versions, nice idea but not always useful. Try doing some research and investigation first like everybody used to do before the Internet. Ask other users. Think about it. Contact the vendor and ask questions. And before you all start flaming me, think, the biggest expenditure most people will make in their entire lives is to buy a house. How often do you get to live in it and try it all out first? Almost never, but you do your research well instead.
Lastly, if you do not like the prices of apps you want to buy, then write your own. The API is free. See how easy or hard it is then complain if you think the app is overpriced.
Props to Jonathan Zweig for being on top of the news and being frank with the facts.
I think it’s Mel that doesn’t understand basic Econ. Sure, you want to maximize profit. But selling more at a lower price can be better in many cases. Their “cost” is fixed at this point. They have developed the app. and put it in the store. Whether they sell one or one million doesn’t affect that. It’s just their deciding what price point will generate the most business. If they think a lower price point will generate more dollars, they will make more money. It’s not like they have to make any more product. Economies of scale and the like really don’t apply here.
Heh. Jirbo – one of the slimier companies on the App Store….still, nice of them to chime in with some numbers here. Won’t stop me from keeping my eye on them – and their apps off my phone, at this point anyway…