Initial success stories overhyped

Despite initial impressions given by Apple and the media, success stories at the App Store are actually rare, a new report suggests. Apple has enjoyed pointing to Trism developer Steve Demeter as an example of App Store profits, as well as a new egalitarian footing for independent developers. Demeter managed to accumulate $250,000 in two months through his iPhone app; while some observers believed he would be able to retire on future iPhone profits, Demeter now admits that he is only living a wealthy lifestyle because he invested in Palm stock, which jumped in value from $1.76 to $12.

Newsweek writes that after conducting interviews with consultants and programmers, it now appears that many developers are failing to turn a profit on their apps. In cases where money is being made, even popular titles are often making less money than might be expected. Trib Cubby developer David Barnard complains that in spite of good reviews and highlighting from Apple, he still ended up in debt because of his app, and having to sell his car. Only the release of a second app, Gas Cubby, has generated a profit. "But we spent a hell of a lot of money to get there," says Barnard.

Forrester Research notes that most apps take six months of full-time work to produce, at costs ranging from $20,000 to $150,000. Developers must then pass through Apple's approval process, where almost 60 percent of submissions are said to be rejected at least once. Once on sale, of the over 85,000 titles currently in the App Store, only a few hundred are believed to be capable of supporting full-time jobs.

Another issue is that even if an app is successful, the reasons for success may be unpredictable and difficult to repeat. Independent developers are also being increasingly shunted to the sidelines, as while half of the top 10 paid apps in 2008 were by small developers, today only one in the list (RedLaser) is an independent project. The app's coders, Jeff Powers and Vikas Reddy, say they are still in debt.

Major companies are said to be hurting App Store prices, deliberately pricing apps low or for free because they can afford to use them as marketing rather than a source of income. 148apps.biz observes that three out of four iPhone apps presently cost 99 cents or less. As a consequence some developers are believed to be migrating to rival platforms, by the likes of Palm, Google and Research in Motion.

by MacNN Staff