[FoRK] $100M for iPhone Developers

Luis Villa <luis at tieguy.org> on Fri Mar 7 08:47:55 PST 2008

On Fri, Mar 7, 2008 at 11:28 AM, Jeff Bone <jbone at place.org> wrote:
>
>  On Mar 7, 2008, at 9:57 AM, Luis Villa wrote:
>
>  > (2) making the store *exclusive* and taxing every sale by 30% is
>  > almost certainly a bad thing for incentive and innovation; my guess is
>  > that it is such a bad thing that it will  I believe in other contexts
>  > we'd call this a command and control economy, and we know that in the
>  > long run those don't work very well. But hey, they're consistent,
>  > UI-wise: http://images.google.com/images?q=russian+propaganda+posters
>
>  Nb, the model here is much more like the game console model, where the
>  vendor exercises significant editorial control over the platform, than
>  it is like the PC model.  And I'm not sure that's entirely a bad thing
>  for a mass market;  I would say the market for low-cost (and free)
>  software on Windows has suffered from a very high noise-to-signal ratio.
>
>  I also don't think this is going to be the exclusive channel.  In the
>  last release of the iPhone OS, Apple *did not* completely re-break
>  known jailbreak hooks.  At some point it's going to be clear that this
>  isn't an arms race they can win indefinitely.  At that point, the mom-
>  and-pop ISV has a decision to make:  do you avoid the App Store
>  channel and rely on a high level of geekiness in your (inherently
>  greatly reduced) target user base to have (a) jailbroken (?) their
>  phone, (b) found you on the Internets, (c) downloaded and installed
>  your software, and (d) paid for it, or do you just pay the tax and do
>  the deal via the approved Apple channel?
>
>  If I'm making software for money, I'm going to go the App Store
>  route.  It has higher expected returns.

Or you can go the web route, access a broader market, and not pay
apple a 30% cute. The hacked-or-Apple dichotomy is a false one that
Apple chooses to impose on itself.

>  The key thing here is that even small payments add up quickly in a
>  mass market.  It's conceivable that the iPhone installed base could
>  quickly get into the 100s of millions of units.

I'm very curious to see if that is actually the direction they go;
it's not at all clear that they're going to offer the low-cost model
that would push them in that direction.

>  FWIW, back when we were attempting to do deals with the Magic Cap
>  hardware vendors (Sony, Motorola, Phillips, and Panasonic for
>  starters) it was common for them to want a piece of the action.  Our
>  software had a recurring revenue piece, and they actually wanted *us*
>  to pay *them* for access to (i.e., bundling the basic apps on) the
>  device, and they wanted a piece of that recurring revenue.  Point
>  being, this sort of thing isn't uncommon in the consumer device space
>  --- the economics are completely different from what you see in the
>  general computer market --- and this isn't at all the surprising /
>  appalling thing that some folks are making it out to be.

It is definitely fairly commonplace; running the tollbooth always
looks like a profitable temptation. I don't think it's a coincidence,
though, that the one of the vendors brave (foolhardy?) enough to take
a pass on this model is the most dominant, durable, and pervasive
platform monopoly that the consumer electronics industry has ever
seen.

Luis

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