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The Mac App Store – Apple vs. Developers

Since Apple announced the Mac App Store yesterday, there’s already been a lot of controversy. Here is how the announcement looks from our perspective of a small software vendor, who has shipped software for the Mac for more than a decade:

Round 1: It’s a monopoly

Since this will be the only portal for purchasing apps that comes pre-installed with your Mac, Apple has a def-facto monopoly over the distribution channel. It will be the place where the majority of users will look for an app first. As developer you cannot afford to ignore it. Otherwise your competitor will eat your lunch. If you want to stay in the business you have no other realistic option as to play by Apple’s rules.

Apple wins. (Apple: 1, Developer: 0)

Round 2: Apple’s fees

Apple takes a 30% cut from an app’s sales price. That’s a much higher than the 6-8% usually charged by software payment providers as Kagi, eSellerate, or FastSpring. And much, much higher than the ~3% you are paying when dealing with credit card companies directly, as some software vendors do.
What do you get for the premium Apple charges, except the exposure in their App Store, that you won’t get from the established payment providers? Almost nothing, as digital downloads or licensing mechanisms are offered by the established providers for free or a tiny surcharge.

Apple wins. Developer receives even score. (Apple: 2, Developer: +1 for exposure, -1 for fees)

Round 3: Loss of Customer Relationship

Apple does not disclose the customer information to the software vendor, making it difficult to identify existing customers. When the developer wants to release paid upgrade for its software, he is facing a dilemma: Apple does not offer a way for distributing paid upgrades and there’s no way to contact customers directly. How to resolve this? There seems to be no other way than releasing a new version of your application as separated product in the AppStore at the same price for everyone. Existing customers will be reluctant to purchase the new version, as they already paid in full. And I can’t blame them for that.

Developer loses. (Apple: 2, Developer: -1)

Round 4: Piracy

Since all apps are secured by the same copy-protection theme, I’m certain generic cracks will be available shortly after the release of the App Store. These cracks will unlock any app purchased from the App Store, so it can be distributed freely. And since the Mac is still an open platform, there is no jail-breaking required. The initial barrier of installing such a cracking toolkit will therefore be a lot lower than on iOS. And because prices in the Mac App Store will be a lot higher than on iOS, the temptation is a lot higher, too.

Developer loses. (Apple: 2, Developer: -2)

Round 5: Additional development and support cost

Most developers will offer two versions of their products: The one offered on the developer’s website including a built-in demo mode, which can be bought outside the AppStore for a reasonable processing fee, and the one in the App Store. Since Apple’s approval guidelines prevents developers from using anything else than the App Store itself for updating products purchased trough it, you have to implement two separate update mechanisms. You also have to explain to customers, why they can’t use the latest version from your website until Apple has approved the new version in the AppStore, too – if they approve at all.

Developer loses. (Apple: 2, Developer: -3)

Round 6: Approval process

In our experience, getting a new release of an iPhone app approved by Apple takes about a week. I doubt that this time span will shorten for Mac apps, since most Mac applications tend to be more complex than iOS applications.
If you do ship software, which companies run their businesses on, like us, you cannot afford a single day of downtime because of a broken feature. Software updates need to be in the hands of customers quickly, especially if you need to keep up with changes beyond your control, as we have to do with eBay’s constantly changing system. In the end, the customer doesn’t care why he is not receiving a critical update in time – he will cast the blame on you.

Developer loses. (Apple: 2, Developer: -4)

Wrapping up

The App Store might pay off for new developers, who don’t have an established business yet and develope a general purpose app or game selling for around USD 10.00. They are freed from building the infrastructure for distributing and selling their apps. I’m sure there will be a few early instant hits in that area – so it might be worth accelerating your development if you fall into it.
If you have an well-established app targeted at a small niche, live will become harder. You probably won’t see an increase in sales that compensates for Apple’s premium fees, as people in your niche are already well aware of your product.

After all our outlook is not very positive. If you see things differently, please let us know in the comments.

6 Responses to “The Mac App Store – Apple vs. Developers”

  1. Steff Says:

    Don’t forget the increase of visibility you get through a Mac App Store. This might bring you users that would otherwise not have taken notice of your app.
    I believe there will be paid updates – Apple announced those for iOS Apps some time ago but didn’t bring them on. I’m pretty sure they will come with the Mac App Store.
    Piracy is an issue but there are ways of getting around it – just as with iOS Apps.
    The two things I’m concerned of are:
    a) private frameworks: how many Mac Apps get along fully without the use of private frameworks?
    b) the tendency towards ringtone app prices: will prices drop as with the iOS App Store?

    Other than that: good luck with your App!

  2. Norbert M. Doerner Says:

    Wonderful article, I totally agree to your points.

    “Increase of visibility” is something that I doubt a bit. The iOs store doesn’t really give you a nice experience when you search for software, way too kludgy and filled with tons of incredibly crappy apps. Finding the good stuff is currently rather hard. I really hope that Apple improves that a LOT!

    And yes, most of my own products won’t make it into the store as they of course use certain private APIs to get their Jobs done (pun intended) 😉

    So I will probably have to write feature-reduced “kiddie” version of my apps for the store. What a support nightmare.

    And let’s not talk about the lack of possible response to stupid and wrong reviews in the store.

    Yeah, Apple still has a LONG way to go to really make it as nice, slick, and “easy” as they keep telling us it will be…

  3. mcj Says:

    well explained. looks pretty much like Steve Jobs has finally come to the level of Bill Gates. The iPhone App stroe was already painful, so will be the store for mac apps. Let’s hope for a big movement against this move.

  4. Jonathan Collins Says:

    I agree. I was an apple iphone developer and quit the program because of their outrageous fees and rules. Now also with a grain of salt i was not the best developer. I run a business and its just me so i had a hard time putting the resources in an app when i had to split my time running my company and dealing with customers and the other things that go along with it. I decided to stop and focus on web design and online programming since thats my strong suit. Do i wish i had come up with some stupid app that farts and made me a million dollars? Sure. But with 100,000 + apps in the store you have to have a lot of money backing you to advertise your app. Its not like apple lets you apply to be a featured app. I still believe in the OSX platform. I have had people ask me what i though of linux and the like and i have always said that i think OSX is the ultimate evolution of an open source kernel.

    My final thoughts summed up is this. The app store for Mac is going to have a great impact on developers. Especially those of us who are one person garage companies. The allure of exposure in the app store is strong but the 30% take by apple will make it almost impossible to save up revenue to further develop and grow your company. This comes from my experience where i devoted time and money only to fail as an iphone developer. Looking back i could have taken my developer fees and the fees i paid apple and hired help and grown my company in a different direction instead of falling behind.

  5. d morgan Says:

    good article agreed, apple make so much money as it is, this is just another powerplay from them to dominate everything even further and have an even larger take of money, and the flaws you point out with their system are real and genuine, for you as a developer I think there is one way to deal with it, add the (30% – your normal processing fee) you might pay on a sale, put your app on the app store at this inflated price, and then “let the app store work for you as an advertising channel for your software” so you make the same money as a normal sale. ie just another way in which it can be purchased and judge it on its merits down the line, it might turn out like the “revolutionary” itunes social thing to be a bit of a flop who knows. That way if people are smart enough to find your website and purchase from it outside the app store theyre effectively getting a discount for theyre initiative. dont let apple turn you into theyre revenue stream by reducing your margin that you currently make.

    long term garagesale user, keep up the good work.

  6. Mrcap Says:

    Many success stories coming out of the AppStore are proving that many of your fears may be unfounded. In addition to greater exposure through the AppStore, your credibility increases due to the fact that many people or potential purchasers feel more comfortable buying an app if it comes through Apple’s direct channel, including myself.

    I wish you great success and hope that you use the same vigor touting the AppStore if and when you succeed there. Good luck!