S06E09 - The price of an app

This week the team reflect on what one of us probably at some point calls 'the app store economy', but essentially means 'what apps cost and how you pay for them'. The team marvel at polished software sold for less than a coffee and wonder how (or even if) they could be good business.

Things of the week:

  • MacLeod: Ewan's worried about the number of young children he's seen recently in prams (strollers) watching iPads. He also notes that Mayfair and Islington are different parts of London and who are we to argue...?
  • Blandford: Rafe notes that LG have announced a WebOS-powered smart TV at CES, resurrecting the failed Palm smartphone OS. Perhaps there is hope for Symbian after all?
  • Smith: Ben's received his Ubislate low-cost tablet as discussed in S06E07. He's also used a Samsung app store and upset a child.

We wonder about mobile app pricing this week, discussing:

  • Whether it is reasonable for app developer to expect customers to pay full-price for major updates, especially for OS version updates such as the recent iOS7 launch when Apple made many changes mandatory if developers wanted to submit any updates at all.
  • We question whether in-app purchasing is a viable way for all developers to reproduce the success game developers have had with this payment mechanism.
  • We question how developers can ever earn more from app sales. Are consumers addicted to cheap and free apps? Is the only other way to make a charge for a partner service outside of the app world?
  • Could app subscriptions ever be an option and why haven't the newer app stores (such as Microsoft's) learned from the economics of Apple's offering and innovated in this area?
  • What is the cost of an app acquiring a user? How can these costs be sustained given trends in app pricing and will there be pressure on store operators to reduce their cut?

Rafe also uses the words 'pricing elasticity'.

We ran out of time this week, so no listeners' letter. However, courtesy of O2, we have one more HTC One to give away in episode 10 next week.