Why app stores are evil for business software

August 14, 2011

App stores have been around for a while, and our company has been selling MobileNoter through all major ones: Apple Appstore, Google Android Market, and Amazon Android Market. We know a thing or two about app stores, and the most important thing we know is that they are totally unfriendly to the business software vendors. I will use “business software” in a loose sense here – basically, everything that is not entertainment and doesn’t cost a buck or two apiece is considered as a business software in this post.

1. App stores hide buyers from vendors. While staying anonymous is cool when one buys iFart app or perhaps another countless “3-in-a-row” clone, this is not the case for the business software. First and foremost, it is going to be harder to provide support to the customers. It is harder to identify whether they are your customers at all, what software they bought, what version they are using, and so on. It is also harder to do cross-selling and up-selling. You can’t send an email to the customers saying “You have our software for iPhone, we have a new version for iThing too”. What app stores should do: they should allow for opt-in email sharing by the customers. If a customer wants to share her email with the vendor, she should be able to just do that without any hassle.

2. App stores have terrible pricing structure. They don’t have discounts or coupons issued by the vendor, they don’t have volume discounts, they can’t sell upgrades to the applications, and they don’t allow packaging your goods and services, for example offering a premium support plan for extra money. All these things have been used by the business software vendors for a long time. One would wonder why major app stores can’t implement these things. The only thought that comes to mind is that they are only interested in selling entertainment stuff. What app stores should do: they should implement flexible pricing structures similar to those of Plimus and other eCommerce infrastructure providers.

3. App stores don’t let a free trial (with the exception for Google Android Market, where developers can use in-app purchases for that). Business software costs anything from $10 to 4-digit figures and few people are going to just cough up this kind of money without seeing what they are getting first. What app stores should do: pretty obvious.

4.The 30% cut is not justified. App stores shouldn’t be THAT greedy. It’s OK to take 30% off $0.99 purchases because the transaction costs are high and because the impulse buyers are the main drivers of sales. It is a totally different story for elaborate and expensive software. These apps require out-of-the-app-store marketing, because they are rarely going to be in the app store top lists and the app stores’ search capabilities are dismal. The 30% cut is a good deal when compared to the brick and mortar stores, when you sell software in a box with a disk and a printed manual, and it is sitting on a real shelf. Ain’t these times gone forever? What app stores should do: they should implement a straightforward structure where the cut is reduced the higher the price of the software is.

5. Lack of payment options. App stores only know the credit cards. The other 10 ways of paying are unknown for them. An enterprise buyer is likely to demand an invoice, to pay with a purchase order, and so on. Again, this is not going to be a problem for a cheap one-time-run app. What app stores should do: again, pretty obvious.

What the business software vendors should do: the only way currently available is to move your software into SaaS territory. If you claim that you provide a service, then you are free to sell it on your website, gather customers’ emails, provide flexible prices, offer a free trial and don’t give a leg and an arm to the greedy app stores. A lot of companies are doing this at the moment. However, it would be more convenient for the users if the vendors didn’t force them to their websites. Sometimes the app is not very suitable for the SaaS model, and strange things can happen along this route. Second, the app stores still can change the way they are treating SaaS. When the Apple Appstore introduced subscriptions a few months ago, it scared shit out of many SaaS providers, because for a moment they thought they would be forced to part with 30% of their money.

Is there any hope? Actually, I think there is, at least for Android. With the two major app stores and smaller (carrier operated) rising, it creates a place for competition and this will push the pressure on the app stores to improve. At least, that’s what the theory says.








The best study of AppStore marketing to the date is here

January 27, 2010

I can’t believe someone published a brilliant study of AppStore marketing. Some nice key points:

  • Price reduction by 2 times resulted in 3 times more units sold.
  • Free ad supported version of an app can easily bring more revenue than the premium paid version.
  • Good free version of an app is a must, especially if the premium version is expensive.
  • Web advertising for AppStore is utterly useless.
  • Cross-application advertising for AppStore is almost useless.
  • AppStore Ranking algorithm revealed!

New release of MobileNoter is out there!

November 11, 2009

I am excited about our recent release of the MobileNoter. Technically, it is an update for our iPhone app. However, it is a really major update, AND we offer a paid subscription now. Previous version was free, and “free” doesn’t count when we talk about product’s viability. Apple approved our update a few hours ago and we are already have paying customers – this is a good sign!

So it’s time to become serious about marketing. I don’t think our app will make into the Top 10 in its category any time soon, because it’s kinda niche app. On the other hand it’s not a throw-away app either, that is when an app is downloaded, run once, and happily forgotten or removed altogether. We’ll see how it goes and I will post about interesting discoveries we are sure to make.


Good blog found

October 28, 2009

I want to recommend a good blog by the AppsFire team I found recently. The guys have good insight on the AppStore and its life. They provide an app discovery service, which is what can make iPhone users’ life easier and it also provides additional marketing tool for iPhone app developers. Both things are badly needed by the iPhone community. We just started marketing for our own application: MobileNoter and found out that it’s a tough task. More on this later.

We are in the AppStore, finally!

September 19, 2009

Our app – MobileNoter just got approved into the AppStore. The approval process took one week. The current version is free, because we want to see how popular it is going to be, plus we’ll be adding some much needed features very soon. We’ll introduce paid version once the users start saying they love our app.

Your app got a bad rating in the AppStore?

August 24, 2009

Here is the solution: hire this great PR firm – Reverb Communications, and they will create a storm of fake positive reviews, their interns and possibly employees will be posing as fake users and give your app 5-star ratings everywhere!

While this is not something new – shareware developers still do it sometimes on download.com and used to do it on tucows.com, but a glorious PR firm? Can’t they earn their buck in an honest way? Maybe they can, but we should not count on that.

Can Apple stop that?  Yes, they can, because others have been doing that successfully. Stephen Kaufer, who is Founder & CEO of TripAdvisor (great site) describes in Founders At Work (great book) how those hotel owners and managers are submitting fake reviews all the time to push their hotels’ ratings higher. While Stephen doesn’t give all the details how they distinguish fakes, they obviously do a good job at it, at least from my standpoint.

Now, will Apple stop that? Well, they won’t. This is an entirely different story, let’s just say they’ve got other things to do. But we – developers can help here. It is relatively easy to write an AppStore crawler that will datamine the information about reviewers – the ratings they give, the apps they review, the texts they write, the dates of reviews, and so on. This program would easily identify most offenders in the same way the TechCrunch guys did manually. It is not a commercial project, of course – but it could be good for a student course work, or maybe even for graduate work. Anyone?

Apple fights AppStore spamming?

August 6, 2009

All of a sudden, Apple just pulled the plug on one of the worst spamming offender – Perfect Acumen. I didn’t review statistics on this one, but it is said to be (or, used to be) #3 developer in the number of apps in the AppStore. While Apple says the reason for the ban was that Perfect Acumen’s apps violated someone else’s copyrights, it’s a no-brainer that the infamous app developer got Apple’s attention precisely because of its spamming strategy.

Hooray to Apple. They should really go after Brighthouse Labs next.