Ilium Software has five apps in the App Store, including eWallet, to store private info, and Apples2Oranges, a shopping app. We recently asked Marc Tassin, senior product manager, to elaborate on what life is like these days for devs.
1. First, tell me a bit about Ilium. How long have you been in business and why develop for the iPhone?
MT: We've been selling software for mobile devices going on 12 years now. In fact, the company was founded on the idea of writing software for the Apple Newton. We decided to develop for the iPhone simply because, based on our experience in the business, it was a great platform and we really felt that the public would embrace it.
2. If there a trait to your apps share and if so what would it be?
MT: Quality and service. We're crazy about making sure that the software we release is the best we can build. We are firmly against the "your customer is your beta tester" mentality that we've experienced first-hand with other software.
3. Okay, so you and many devs have concerns about the App Store pricing model. What's the core issue?
MT: It isn't the App Store itself that is to blame. The problem is that when the store went live, the model that got adopted out of the gate was bargain-basement prices. This is great for the consumer in the short run, but in the long run it isn't a model that supports long-term software development for more than a few lucky products.
4. Are apps too cheap? It seems that devs are more responsible for pricing than anyone else. Essentially, devs have "trained" buyers to pay as little as possible. True or false?
MT: You've hit it on the head. The developers have trained the buyers to expect low prices. So, which developer is going to dive in and be the first one to say "That's it! I'm raising my prices to a sustainable level!" and will they survive? In a sense, I think the market is backed into a corner. Developers need to either find a sustainable model in THIS environment, or something needs to change in the market itself.
5. You've written, "The majority of [devs] will never sell enough of their 99 cent apps to even turn a profit, much less make it to the big time." Then why do they persist?
MT: It's a gold-rush mentality. Every time someone sees an article saying "App X makes $600,000 dollars!" it makes news. Few developers, especially in this economy, can resist such a lure. And it may turn out that enough new folks come in every year to make up for folks that drop out — but that sort of developer turnover isn't necessarily good for the consumer.
6. It's well established that low prices lead to high sales but not necessarily to high profits. Okay, what does equate to profit?
MT: First, I’d argue that it isn't well established that low prices lead to high sales--they CAN lead to high sales. As for what equates to a profit — making more than what it costs you to build and maintain the application. The problem is that most companies don't sell enough, ever. The math is simple, really. 25,000 apps in the store. 800,000,000 downloads. Average lifetime downloads per app equals 32,000 downloads. And that’s the average--many will do worse. At 70 cents cents per unit, after Apple’s cut, just isn’t a sustainable sales model.
7. Apple recently pulled the plug on reviews from people who haven't even bought the product. That should be helpful, no?
MT: First, I'm REALLY glad they yanked the non-purchaser reviews. A real boon. As for the changes, some are good — splitting the reviews by version — but some are really bad ideas. The "Rate It if You Hate It" system that I blogged about Friday. The GOOD part of this is that Apple is listening AND working to improve. That is something I can get excited about!
8. Bigger companies are entering the biz with bigger budgets, dev teams and marketing. They're pricing apps at $4.99 and higher. How can you compete against that?
MT: Fortunately, these companies are focused largely on games. Since our focus is information management, we're in a different market. Even if they did move in our direction, I'm not concerned. We made it the first dozen years by providing top-quality products with the very best support in the business. I believe that the same attitude will carry us through the next dozen years.
9. Dev cycles will get longer as buyers expect more from apps. What does that mean to Ilium and other companies? Will you look to move your prices up to compensate?
MT: This won't have a huge impact on us. We're already in the business of making high feature applications. As for pricing, I imagine a lot of developers are eyeing the new purchasing models announced for 3.0. The Apple store is missing the "paid upgrade" model that a lot of developers have used to fund new features, so this could be the replacement for that.
10. What do you think about the premium section in the App Store that's being kicked around?
MT: I love it and I hate it. I like it because as an idea, it's fantastic. It could really help customers to focus in on the best apps. On the other hand, based on experience, I'm a little worried about how one would get into this program. For good or ill, Apple does things their own way and it could really impact a company's business if they don’t get in.
11. Think the new SDK will make it possible for Ilium to add value to current or new apps? In what ways?
MT: Absolutely. We’ve had many conversations already playing with all the cool things we could do with the new SDK. Yeah, we’re pretty excited.
12. You've asked: "Can you put 6-12 months of development into an application and have any hope of a return for an iPhone application?" What's your answer?
MT: I really do have high hopes that these things will sort themselves out in such a way that everyone benefits. The problem is that if we don't keep these dangers in mind, we stumble into them blindly. I just want to make sure that folks are thinking about this up front so that we can avoid the pitfalls!