The Impact of The Recession on iPhone Apps

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the great depression

PC Magazine had an interesting thought piece on the impact of the recession/crash/depression on the evolution of the iPhone app market. Without parroting the entire article, the main points are:

- Developers are less likely to create free apps with the idea of "somehow" monetizing later with inApp advertising. They are also likely to focus on the #1 player, Apple, and not support the second tier players: Google and BlackBerry

- Consumers are likely to be more choosy in the apps they buy. Once the initial euphoria of the iPhone is over, jaded consumers will want to test drive the apps before they buy, and will limit their purchases.

Being in the center of the iPhone App Space (we talk to dozens of developers every week), we generally agree. It is going to get tough out there, and the idea of "build it and they will come" may very well die on this platform as it did in 2001 with web 1.0. But there are some bright spots, which I think are worth pointing out:

1. Expect less competition from the huge players. In 1999, Yahoo was the dominant web player. Right around 2000, they stopped innovating completely, and started cutting costs. "My Yahoo" stayed the same for the next 6 years, and more importantly, Yahoo Search did not evolve, leaving the door open for the newcomer, Google, to take over market share.

2. Expect the focus to move away from features and towards core functionality. In bull markets, apps bloat up, and the dominant marketing messages revolve around features. Think of Windows95, Photoshop7, and any number of over-funded 1999 web startups. Then, in bear markets, marketing teams are let go, massive engineering efforts are scaled down, and small, nimble players emerge to redefine "simple". Think of the original Mac, launched in 1984 (before the 80s bull market really begun), Windows 3.0 (launched just after the 1992 recession), and more recently Flickr, launched in February 2004 at the trough of the "nuclear winter").

3. Expect adoption of the iPhone to be bigger than you think. Marc Andreesen once said something to the effect that every technological revolution always end up being underestimated. Nobody expected in 1980 that thirty years later there would be a billion personal computers. Nobody expected that 15 years after the invention of the browser there would be over a billion internet users. Now, analysts are busy trying to decide whether Apple will sell 12 or 20 million handsets in 2008. They are missing the fact that, in all certainty, mobile computing will also hit the billion mark by 2020. With a billion devices in 10 years, all hooked up to some form of easy payment mechanism, app development will become a very, very big business.

We will get through this recession, and technology will continue to advance. Ironically, it takes recessions such as these to force innovation and change. Necessity, as they say, is the mother of invention.

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  • Abbey

    Totally on the money.

  • Rick

    Great post. Point 3 is spot on.