iPhone App Store – The Differentiation Paradox (update)

We have been building iPhone applications for the last 10 months now and we’ve made it on the Apple “short list” of partners for iPhone development. Occasionally someone calls that got ahold of that list to get a proposal from us. A common issue we are seeing right now is the same issue we saw in the early days of RIA development. Budgets for adequate design and development of these applications are no where close to deliver the types of experiences iPhone customers have come to expect.

What the app store market has done is create an interesting issue for companies considering an iPhone effort – do you build something quick and get it out there for a little, or do you wait for the market to mature and budgets to increase – if you go for the smaller budgets, the applications will not be up to your standards (and you will almost certainly be disappointed)… if you wait for budgets to increase, will the opportunity pass you by?

To answer the question, we needed to look at the app store as it exist today, and try to pull some useful numbers from it. The first thing that struck us is the sheer volume of applications in the store – roughly 12,000 at the time of the writing of this post, less than 6 months from the launch of the store. The second most surprising item was the number of downloads, 300 million and counting. 

app-store-trend

App Store Growth is Absolutely Amazing

If the above trend continues, by the middle of next year there will be 100,000+ applications and 3 Billion (yes, with a B) downloads of those apps. That means if you start building your iPhone application today, by the time it is released you will most likely be competing with 100,000 other apps for an average of 34,000 downloads per. This presents a HUGE opportunity for some, while an even larger dilemma for others – The upside is obvious: if you create an application for the app store and its even a mild success: cha-ching! The downside is that it will be easy to get lost in the 100,000+ applications.  For a little more inight,we looked at the individual app store categories: we noticed, even today, it would be difficult to create something truly differentiating for a low budget… there are 2800+ games, 1000+ educational apps,  1000+ productivity, 1800+ “utilities”… heck, there are even 100 “weather” category apps and over 800 in the “books” category.

 

Our advice: For those that are considering an iPhone experience next year, you need to make a hard choice. If you decide to go forward, you will need to look at creating something that is truly differentiating – this means respecting the power of the iPhone platform and taking the proper time (and resources) to craft an engaging application. If you believe you will fall short, save your money and and use the built in Safari Browser on the iPhone along with some internal web developers to create a website presence specifically designed for the iPhone.

It is too late to be a “first mover” in this market – it is time to do it right or not at all —

 

update: it appears that I’m not the only one commnenting on the status of the app store application market:
http://www.macrumors.com/2008/12/10/app-store-developers-debate-pricing-and-marketing/ 

6 comments
  1. Nice article. I’d agree with your assessment about the upcoming difficulty for new iPhone developers and getting consumer visibility. By the way where did you get the data from (12k apps, 2800+ games, etc…)?

  2. It is still way better than the zero visibility we always got from Nokia

  3. JulesLt said:

    It seems more realistic that the number of sales/downloads is going to flatten out – even if iPhone sales hit 30 million (total) users would have to be downloading 100 apps a year, which feels on the high side, although I may be wrong (considering some ‘apps’ are content wrapped in a shell app that may be possible) – or sales of the iPhone may accelerate hugely.

  4. Stats were pulled using 2 sources – Apple’s own press releases announcing app store stats, and the app store itself (we actually went through category by category and rough counted the number of applications in each)

    more good resources for app store info:
    http://www.mobileorchard.com/price-and-popularity-the-iphone-app-stores-data-shows-whos-making-the-big-money/
    http://www.redrome.com/app-store/
    http://metrics.medialets.com/
    http://iphoneapplicationlist.com/

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