App store revenue is not an ideal way to scope the value of an ecosystem to developers. The majority of the revenue comes from games, mostly freemium using IAP, while a large proportion of the most valuable apps are offered for free and generate revenue through other means (Facebook or Amazon, for example). However, it does give a pretty good proxy for the broader behavior of the users, and it also of course is very relevant for developers who do want to to charge.
If the current market dynamics remain, Google Android’s user base will at least double in the next few years – the iPhone base is still growing, but it will probably not double. However, those users will be gained at progressively lower (much lower) device price points, and with at significantly lower spending profiles.
And to Apple, that’s just fine with them. They’ll take higher ARPU over difficult-to-monetize reach in emerging markets any day of the week.
Steven Tweedie from Business Insider penned a piece this morning ripping into Apple’s App Store saying it sucks, is outdated etc. It’s a well-researched piece with some good quotes and I agree with most of the concerns.
Of course Google Play is ancient and outdated as well. The most common complaints involved here relate to both major app stores. Search is probably the biggest one:
Fixing how search works within the App Store is a tough issue to tackle. Due to the App Store’s sheer size, many apps share a similar name, spelling, or keyword, which makes sifting through pages of obscure and aging apps a pain, especially when you have a specific app in mind.
On personalized search specifically:
Just as Google draws upon a user’s past search history to personalize search results, Apple could also introduce some sort of personalized recommendation feature that could directly feed into search, adding a wealth of context.
So why hasn’t Apple attacked these problems sooner? I’m just not sure it’s such a huge priority for them. Take this quote from the article as a starting point:
From Apple’s perspective, it needs to keep developers happy lest they run to Google and the Play Store. As Apple competes with Android, one of its key advantages is the the ability to retain developers who are making brilliant mobile applications. Without those people, Apple risks losing the platform war to Android.
Except the truth is it’s actually the other way around: developers build applications for users, not themselves. So long as users remain loyal to iOS, then developers will continue dealing with an imperfect App Store just to reach them. What do most users want? Their favorite apps, available to them at any given moment. And most of those are the same apps that have been in the top 30 for years and are easily reachable through the App Store. They don’t use very many and they don’t have very much patience for new apps.
So in that sense, Apple has very little incentive to make wholesale changes to the App Store. It’s not the open web where anyone can type in a query (e.g. traditional Google search). It’s a closed ecosystem with a great deal of inherent lock-in thanks to this availability of apps, as well as continuity between devices and a litany of other considerations. Smaller app developers looking for traction have a much greater incentive to push for a more equitable app store than platform operators or indeed major app developers.
The harsh truth is that Apple (or Google, for that matter) doesn’t need them to make huge profits from their respective app stores. The discovery problem is only a problem for one segment of the app ecosystem: and it’s not the segment that’s making Apple the most money.
Over the years, the number of “zombie apps” has grown, the firm found: by last month (June 2014), there were 79.6 percent zombies (953,387 out of 1,197,087), up from 77 percent in May 2014. And these figures are up from last year (June 2013), when 70.4 percent of all apps were zombies.
80/20 rule in effect, almost to the dot. Not surprising.
But Localytics also points to an emerging trend referred to as “app burnout.” Since 2011, the percentage of Power Users has always been greater than Loyal Users, and now those figures are diverging even more, the firm says. From Q1 to Q2, Power Users increased by 1 percent while Loyal Users decreased by 2 percent. In Q2, the 25,000 apps Localytics measured had an aggregate of 26 percent of Power Users and 17 percent of Loyal Users, which could be an issue for app developers because Power Users will often use an app heavily in a short period of time, then stop using the app entirely when they reach an “engagement ceiling” – like completing a game, a task or specific function.
The numbers relative to that type of burnout probably skew widely depending on vertical. Games are notorious for having short shelf lives so you’ll always see the kind of churn that most productivity apps don’t have.
Apple is likely well aware that it needs to shore up its search and discovery options in both the App Store, iTunes Store and Maps, all of which are said to be areas of focus for Dupin at Cupertino. Maps and the App Store in particular have been areas that have come under fire from consumers as not necessarily the most reliable services in Apple’s arsenal, so it makes sense for the company to bring in some fresh talent to tackle these trouble spots.
Improving Apple Maps? Good luck with that. I think crafting a better App Store algorithm is a much worthier challenge.
A change in UK tax law that may take force at the start of 2015 would push the price of apps, music and other downloads and “e-services” higher in the United Kingdom. The legal shift would see downloads in the United Kingdom charged the value added tax (VAT) of that country. Currently, The Guardian reports, companies like Apple and other digital store owners “are allowed to sell digital downloads through countries such as Luxembourg, where the tax rate is as low as 3%.”
This is fundamentally insane to me. From their e-mail reply to the Hueman founders:
We understand that there are no hard and fast rules to define useful but Apple and Apple customers expect apps to provide a really great user experience.
Yet you’re rejecting an app based on what you’ve defined as a hard and fast rule for usefulness.
Sort of ironic for Apple, a company that prides itself on a UI defined by its minimalism and ease of use, to encourage app developers to build things into their app just for the sake of building them. I imagine they’re going to appeal it.