The 2014 Panic Report
panic.com
panic.com
The problem is that this is not that Apple, Google, or consumers are doing something to development houses. It's an emergent feature of the market and the incentives, so there's no simple way to make it reliably financially viable to develop for mobile (subscriptions and IAP are not simple and don't fit all business models).
I hope Panic can afford to stay in the business of writing iOS apps. Their apps are great. But the money those apps are making them, isn't great.
I am sure people will cite a zillion examples of businesses that make their living from iOS apps, but increasingly this appears more like winning the lotto, akin to 'making it' in Hollywood, than as a viable business model for all comers.
The reliable way to make a living as an iOS developer is to develop for a bigger company that needs an app as a side-show.
We have nearly 7000 daily downloads, something like a 15% 30-day retention rate that absolutely blows the doors off of our competition, and still make very little of our revenue off of that IAP. Even some of our longest players continue to look at ads, because $1.99 seems too steep to them. The best business advice (and scummiest feeling advice) we get is that we're not milking our "whales" properly.
We survive, basically, because of volume - to make it in our business you have to have at least 50,000 daily users. And that's a minimum.
We'll continue to make games as long as we're profitable and can pay employees, but the 30% to Apple/Google, the incredibly low "ARPU" (avg revenue per user) and high costs of doing business have us constantly looking to where we might be able to leverage some of the tech we've built in other markets.
Source: http://techcrunch.com/2014/07/21/the-majority-of-todays-app-...
Several people (a consultant I hired and a few clients) have encouraged me to develop iOS apps. This was based on anecdata, but I eventually convinced a client to hire me to build a simple one as a proof of concept. We found that interest in the app fizzled out fast and I learned that I didn't enjoy standalone business application development much. I didn't rule it out as a hobby though.
Not saying that appstore isn't broken, I think it is, but for this particular example, I don't think store is the problem.
That "oversupply" of developers, coupled with platform limitations allowing only simple apps, immediately drove down prices to the $1 point, as the best professional shop was effectively competing against someone coding on their weekends, and it wasn't really possible to differentiate their product by building something bigger.
But that's changing. With the bigger screen of the latest iPhones, more RAM in the latest iPads, and better inter-app communication, the platform is starting to be capable of hosting significant applications. All of that, plus the fact that some of these products have been under development for several years now, makes it possible to build a competitive moat that will be difficult for hobby developers to bridge.
So that's what I see as positives going into the future. But app developers are going to need to do what Panic is doing, raising their prices, but they are going to have to do it gradually, maybe 10% a year, so the difference in price with competitors doesn't immediately see them reduced to zero revenue.
Apple made some very short-sighted decisions in the design of the app store that are going to haunt them for years to come. They need developers to write the apps that make their devices real productivity tools but they've cut the legs out from under those businesses before they could grow with their stupid policies.
I don't see this ever happening on mobile or tablet. No one is going to sit there and create a spreadsheet on a smartphone, no matter how big the screen size is. Once you have email, a PDF viewer, and a spreadsheet viewer (already available), what more could you possibly need?
Apple's pricing is right. It's uncomfortable to sit and stare at a tablet or smartphone for hours at a time, nevermind interacting with it (no matter how good swipe is, it will never replace a keyboard+mouse or a game controller).
In contrast, some of the most popular games this year (Monument Valley, Wayward Souls) have come out with premium pricing, which is a refreshing change.
Whenever I change the SaaS, I have to change both mobile apps. This is painful.
Has it ever been tried, if yes, what were the results ?
Pre-iPhone, a $20 shareware app was considered pretty cheap. Now less than 10 years later the highest quality apps from name brand companies can't command it.
It's not only a trend among average consumers though, it's also sadly a trend among us developers: not a lot of developers are willing to spend even a single dollar on software they have to use every day. "Do you have a free version?" "Why do I have to give away the application I spend years full time on writing? Do you work for free?"
I don't think this will end well. If we less and less value software on its true worth, it will become less and less attractive (or even possible) to write the software we need in a society which more and more relies on software. Watch this great presentation by Erik Meijer [1] where he addresses this problem (and others ;))
I think part of it is the trust proposition too. Why do people pay {BIG NAME DEVELOPMENT COMPANY} {>$1} for an app in the desktop world? Support and upgrades.
What are the two things that the app store has more or less excised from customer expectations w/ regards to a purchased app? Support and upgrades.
Best of breed (aka Panic) aside, obviously. But you have to admit there are a lot more fly-by-night app developers than on desktop.
Edit: It'd be interesting to see how "each feature costs $1" IAP would play out. (Odd parallels to the arguments cable companies are having re: a la carte pricing)
"We had a very long, very torturous situation with Status Board almost being pulled that we’ve never written up out of sensitivity to our relationship with Apple. I only mention it here because it proves that it is possible to fix these awkward rejection situations without Apple suffering negative PR in the public eye — we did that 'offline'. But it took an absolutely massive amount of mental energy and time to work through — positively Sisyphean. I would never want to do it again — I’ve run out of patience, I guess. I can say for certain that the 'bad PR' version of the app dispute process is monumentally more effective. Which is a shame."
Apple's process is a favorite punching bag, of course, and for good reasons.
But I find it so common that 'bad PR' disputes that gain traction (or from parties who can easily command an audience) are more effective that I'm honestly have trouble thinking of exceptions to contrast Apple with.
Anyone know of some?
If not, what does this say about the limits of businesses to address systemic problems?
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A little OT, but reading your comment I remembered how I used to SSH to my home-server using my ex-wife's Nokia E71 sometimes around 2008-2009, when we were going out with friends and I was getting bored. That phone was pure genius, it had a nice keyboard, no need to purchase any SSH client, you could write Python code for it (I was always too lazy for that, though) and it was just pleasant to use.
Maybe a physical keyboard would be better, but I doubt it. On a desktop or a laptop I type in SSH just about as quick as I can think (sometimes faster :p). On a phone, it's way slower, and when I can type quick enough, the latency over wireless networks is slow enough to make it tiresome.
Although, I do have a Sharkk keyboard for my iPad and using SSH with that is pretty slick. I have yet to link dropbox with one of my cloud servers to enable an edit, save-to-dropbox, server update loop.
The behavior typically is search for "free xyz" first and if I find something that meets my needs then so be it. I wonder if having "lite" versions that have features removed and are offered free would have any impact on their revenue.
Is there anything special about this company?
EDIT: Although the people downvoting (currently -1) this won't read this edit anymore, the question was (and is) meant serious.
A hugely popular (for its market), established, independent, and profitable software company gives clear and transparent insight into how the past year has gone for them and their products.
It is a matter of opinion if that makes them special or not.
I guess their Panic report hasn't been upvoted just for being from Panic but also because we have here another critical voice of Apple and the Appstore processes from a company that for sure doesn't just like doing Apple-bashing.
Compare to patio11, who runs a couple of small online services that together gross only a couple hundred thousand dollars per year--nothing remarkable, from a business sense. Yet his blog posts about running a software business regularly shoot to the top of HN because they're well-written posts about running a solo software business.
Maybe a minor point to some here, but I'd love to know more about the QA process changes they're hinting at.