[FoRK] $100M for iPhone Developers

Jeff Bone <jbone at place.org> on Fri Mar 7 10:48:11 PST 2008

On Mar 7, 2008, at 10:47 AM, Luis Villa wrote:

> 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.

Fair enough, but even if the iPhone was open to download-and-install  
from anybody's website, I would think there are still advantages to  
the centralized store for the random application developer.

>> 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.

Who's "they?"  Prices are to be set by app developers, and "free" is  
an allowed price (in which case Apple collects its usual 30% --- of  
zero.  I.e., if you make your app free, you don't have to pay Apple  
for hosting and distribution.)

>> 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.



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