Why You Do Not Want to Make an iPhone App

I’ve been making iPhone apps for over a year now and I have one thing to say: Don’t do it.

The iPhone looks like a dream platform. A large user base (about 30 million). An excellent attach rate, with most users downloading dozens of apps. Lots of “cool” factor. It’s a place where you want to be seen.

But look a little deeper and you’ll soon realize that almost nobody is making money on the App Store. Why is that? Could you become one of the exceptions?

The problem comes down to a single number: 45,000. That’s how many App Store apps are currently waiting at users’ fingertips. That’s a crowded market by any standard. And with thousands of new apps appearing each month, it’s growing more crowded every day.

What can we compare this to? The Xbox 360 has some similarities. Xbox Live has 20 million subscribers who also have access to downloadable games. About 200 games. So if you’re an Xbox 360 Live Arcade game developer and you release a game, you’ll be up against about 200 competitors. Or you can release an iPhone app and square off with 45,000 others.

If you’re trying to imagine what this means, picture yourself walking into a U2 concert and trying to stand out in the crowd. That’s what launching an iPhone app feels like—pure anonymity. There are so many apps launched each day that you may never even hit the App Store front page. More on that in a moment.

Free Apps and Paid Apps

iPhone and iPod Touch users download about 5 times more free apps than paid apps. This gives you two options: Either make a free app that will earn no revenue or a paid app that has an 80% worse chance of being downloaded. From the developer’s perspective, free apps trample paid apps into the ground.

Of course, many developers release both a free version and a paid version. Here’s a little known fact. Apple’s developer agreement disallows direct cross-promotion between apps. (I discovered this the hard way.) In theory, your free version cannot upsell your paid version. Customers have to make the connection in some other way—for instance by reading a post on your site (unlikely), or by happening to notice that apps with similar names appear on the App Store.

In practice, however, Apple’s enforcement of this rule is spotty. I had one free app rejected for having a link to the paid version, and had to remove the reference. But another of my apps, PhitPhree, has a glowing orange link to the paid version right there on the main screen. Go figure.

Market Monopoly

One of the most frightening features of the App Store is that Apple completely controls it. Just like Ma Bell used to own all the phone lines, Apple has a monopoly over iPhone apps. Customers don’t care, but as a developer you will. If you’ve ever developed software for any other platform—Mac, Linux, Brew, the web, even Xboxes, Wiis, and Playstations—you have never dealt with a monopoly like this.

If you make an Xbox game it has to go through Microsoft’s approval process. But the Xbox has major competitors. If Microsoft gives you trouble you can move to another platform, even ship on multiple platforms at once. But on the iPhone, you are in Apple’s territory and there are no other pretenders to the throne. With the rise of iPhone competitors, this situation will no doubt change. As it is, if you develop an iPhone app you are at Apple’s mercy.

If Apple wants to reject your app they can do so without explanation or recourse. Last July, Apple approved an app that allowed users to use their iPhone as a modem for other devices. You could, for example, connect your MacBook to the Net through your iPhone’s 3G connection. Customers loved it. But a few days later, Apple pulled the app. The developer was left without compensation, and the app has never reappeared.

Recently the much-anticipated Eucalyptus book reader struggled to get accepted. The problem was that Eucalyptus, which can search the Project Gutenberg database for free, legal, downloadable books, was able to download a Victorian translation of the Kama Sutra. “Objectionable content,” said Apple. This despite the fact that many other 3rd party iPhone apps—not to mention Safari—can also find and show this text. Eventually Apple relented. But put yourself in the developer’s shoes. Would you want to wait on Apple’s whims with months of investment and hard work lying in their hands? And Eucalyptus is merely the latest in a long string of high-profile App Store rejections.

Apple’s control of the App Store also means that the way your app gets promoted there is completely out of your hands. When PhitPhree was released I watched for it to appear in the New Apps section. It never showed up. In fact, some of the apps in that section were over six months old. More recently, Apple renamed this area “New and Noteworthy,” apparently tipping their hand to the fact that they arbitrarily decide which apps appear. Likewise, the App Store offers “What’s Hot” and “Staff Picks” sections—more places for Apple to arbitrarily promote certain apps. But no, there couldn’t be any payola going on here, could there?

A Tough Platform

The iPhone is a tough platform in part because it’s so easy. Buy yourself a MacBook, pay a modest developer fee, learn a little Objective-C and you, too, can launch an iPhone app. But then, so can anyone else. Since the iPhone SDK was released, it has been downloaded over 800,000 times. That’s nearly a million people who are at least thinking about competing with you on the App Store.

The iPhone is clearly a win for Apple. I think it’s a win for iPhone customers. Is it a win for you as a developer? That’s a matter of rolling the dice—Dungeons and Dragons-style.. Just roll less than 25 on a d45000 and you could make money on the App Store too!