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Apps: Will They Continue to Be Cheap?

Will your next app be really in the cloud?

Recently I was speaking to a few developers about iPhone and Droid application development. One of my big questions was, "How well are they doing financially?" You know, that thing that makes the world go round? Money?

I was shocked to hear they all were not doing great. They all had similar issues: lots of expenses, and way too little income. I started doing some basic math and quickly saw that building for these smart phones is quickly putting many companies at risk of failure. Let us look at the basic cost of most applications and maybe you’ll see the same pattern I have seen:

Programmers = $300,000

Marketing = $50,000

Admin/Overhead = $150,000

Total expenses $500,000

Okay so it cost half a million to build applications for each smart phone device. So if one does a simple math calculation, they will need to sell 50,000 copies at $10 a copy just to break even. So let us dig down further to see how many applications hit even 10,000 copies sold.

For smart phone users, that number is less than 5% hitting a paid for level of 10,000, and 50,000 sold is a hard target to hit. Sure, sometimes you hit the user nerve with an Angry Birds-level product and start making real money, but that doesn’t typically happen.

Having been a developer for 30-plus years, I can tell you, picking a winner isn’t easy.  So you are asking, "How is this going to affect me and my quest for great smart phone apps?" Well, you will slowly see fewer and fewer developers getting into the smart phone market.

Some million applications have been developed, and of those less than 5% get close to real use. (Most are junk or just poorly written.) The issue is that the market is now slowly getting smaller when it comes to top-tier developer companies. The ones that have made it will hang around for years to come, but the small mom and pop developers will simply slide off the radar.

So it will go the way that PC development has gone: 50 or so top developers making software for the smart phone market. But wait, on the horizon I see a white (OK, off white) horse, and it is called HTML5.

With all the 4G being released, you’ll soon be tapping into more cloud programs for smart phones. The HTML5 language contains ways to keep the cost low and still provide great results. Websites may just be the saving grace for the smaller developers, but they have only one roadblock: the app stores.

You see, the app store is for apps, not websites. So where should you go if not the app store for these cloud applications? Well, Google it. The greatest resource for finding things is Internet search engines. In my quest for better wide-area CRM (Customer Relationship Management), our company now uses ZOHO for desktop and smart phone users alike.

We could have required our staff to use a localized CRM, but with half of our company on the road, a cloud provider was the best solution. So while smart phone apps will continue to be developed, expect the cost to creep higher over the next few years. But remember to search first for a silver lining in the cloud. You may find it a better solution.

CAW (Cool Application of the Week):

Every week I search and kick the tires on software you can use to make life easier, and take some of the sting out of owning a computer. This week I’m pointing you to ComEd, so you can watch over that electric bill, or see outage reporting. I tried it, and it is nice to know when the electric will be back on during a storm. Speaking of electric, make sure you attend and understand Residential Electric Aggregation (REA). The next meeting is next week: Monday the 14th.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

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