“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.]
” Wow
Who writes these “MacDailyNews Takes” anyways? U R an idiot!”
well Mr. wow, after the article update, i m waiting to hear *your* new take…..
“Apple has ‘an iPhone choke-hold’ on mobile music delivery, said one music industry executive, who asked not to be named.”
Why would he ask not to be named? What’s he afraid of?
MAN IT UP ‘industry executive’!
“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.”
I was pointing out the logical inconsistency of a statement made to cover everything, which is what was being said.
Given that, there are issues of support etc. people have to be paid for that. At some point, a dropping price can’t pay for further development, support, etc.
Yes, some developers even have free apps, but support is often nil, and development is spotty, at best.
While Capitalism , and even radical Capitalism, is good in the private sector where Capitalists love to devour each other and take great pride to hoard great wealth, it’s bad in the public sector such as education and public services such as fire departments and the preservation of natural resources where Socialism provides the egalitarian angle for the greater good.
Those hoarding Capitalists, however, must be prevented from using their personal wealth to pay off legislators to accept legislation written by the wealthy to benefit the corporation first.