Wednesday, August 6, 2008

Dow Jones Bungles App Store Price Drop Story

Dow Jones is reporting some iPhone app developers have dropped prices on their games in the last few weeks.

How does one read this? Ahem…so what? Two things comes to mind. As a consumer, it’s great whenever prices drop. As a mobile gadget enthusiast, I like the fact that there are many choices within any category of software. And with the level of competition, it would make sense that software developers, in order to differentiate their app from others, has to innovate and develop better app than their competitors. And at times when they can’t, pricing becomes an issue.

I think it’s great Dow Jones is paying attention to the level of details such as the pricing in the iTunes app store but I found a lot of the arguments and questions they brought up to have nothing to do with the viability of the app store itself. As Apple has said before, the app store is not meant to generate profit. Nor was the iTunes store mean to be profitable for Apple. The iTunes and app store are meant to sell iPods and iPhones respectively.

There are some issues I’ve got with the article:

  • The writer seems to believe that a price drop will inevitably mean a drop in revenue. This has been happen in the video game industry for years and yet nothing no one seems worried. In the example Jow Jones brought up, Super Monkey Ball’s popular is due to the attention given to it earlier this year during the SDK introduction and again at the WWDC in June. And it’s a great game. Only one other game Crash Bandicoot, with the same cost at $9.99, is ahead of it. SMB is ranked 16th among paid software, most of it costs only $0.99 cents. In one sweep, the article believes there is trouble ahead.
  • I wonder about the cost of development for the iPhone really is. I think it varies. Is it safe to assume that with a team of developers, you may expect better quality software than a one-man effort? Yes, that would be a safe assumption. Hence, the app with more support can charge a higher price.
  • I will get Brain Challenge when it’s actually at $3.99. Despite what the DJ article said, it’s it still $9.99 for the iPhone version on iTunes. They had me all excited for nothing. Not to beat a dead horse, but the iPod version of Brain Challenge costs $4.99. Please tell me where $3.99 came from.
  • Oh, about the music folks? They’ve been dissatisfied with Apple for years now. Nothing new there.
  • As for the impact Apple is having on the rest of the phone makers, great to hear it. Listen to DJ, the article made it sounds like its Apple’s fault other mobile platforms have to start their own app store in order to compete. According to the article, “Greg Yardley, who runs iPhone software tracker Pinch Media, says that with iPhone software downloads running at 25 million in the first month, the pressure is already on Nokia Corp.'s Symbian PLC and Research In Motion Ltd. to follow suit”. That’s a bad thing?!
I can go on and on. But I think you get the idea. Please see MacDailyNews for more. No one really knows where the app store is headed. It been up and running for only less than a month. Developers are getting daily figures from Apple and that kind of update will enable developers to see where they stand in terms of sales and revenue projection and make price adjustments as needed. The dynamics of the app store is constantly changing and the freedom for developers to stop on a dime and change their prices could be one of the best features on the app store, for both sofware makers and iPhone users.

Disclosure: I have Super Monkey Ball. I’m waiting for Crash Bandicoot to drop in price before I get it. We don't like to rant here at Onxo. But this was such a poorly written article considering the caliber at Dow Jones. As poorly written as our rant is but last least we bother to do a little research.

Impact: Short-term, we will see price cuts. Onxo have been seeing this pattern for a couple of weeks now. Long-term for the app store, I honestly do not know. How the rest of the industry follow suit with their own app store implementation may muddy things for Apple. For a mobile device fan, that’s a good thing. I can’t wait for it to happen.

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