Monday, July 12, 2010

Why I work for Apple and the flaw in the appstore

That is right. I work for Apple*. Of course I don't actually get a salary. In fact I don't have employee number and you won't find me in the payroll system. However, I do sell Apple products. I don't mean to but it just happens. In fact I would guess that the majority of iPad and iPhone owners - also sell Apple products and don't mean to.

There are probably many different reasons, maybe showing off a new toy or showing people useful apps. How often have you asked someone, how are you finding your iPad and the next minute you are in the middle of a sales pitch of how awesome the devices is. Perhaps someone has inquired about a particular app and you give them the entire rundown or not only that app - but all your apps. I've noticed a fair few blogger have been writing reviews of the iPad - again selling the iPad to people that read your blog.

The apps store is integral to making the iPhone (or iPad) successful. It helps that the app store is integrated into the device. In one easy click I can review and purchase new apps, something to make my life that little bit better. Having the app store easy and accessible, means there is one less barrier to me finding, downloading and buying new apps which make my iPhone (and iPad if I had one!) a more treasured part of my life.

But the app store is limited and has a flaw - ME.  I'm the app stores single point of failure.

I still need the desire to want to search for new apps. I still need to press that button to see what is new or to search for 'an app for that'. That need could be from a review in a magazine, tv ads, online, being shown an app by a friend or a desire to scratch an itch (metaphorically speaking as I haven't found an app for scratching ...yet!). The store on it's own does nothing. Without something or someone generating the desire to visit the appstore it's just another icon on my phone.

Apple are clever and have removed as many of the barriers and made the process of searching, reviewing and purchasing has easy as possible. The 'path to purchase' is very consumer focused and painless.

This is something that Eric Mack and Bruce Elgort have understood, from what I have read on their blogs and heard on podcasts. They have invested time to make it easy for their customers to review and purchase their apps. Their apps are making Notes and Domino a more treasured solution for their customers - which as we have seen for the iPad and iPhone turns a great solution into an awesome solution and one where users are generating the desire in others to search, find and purchase the same solutions.

So whilst I applaud the efforts of  all involved for getting a great appstore and a great catalog available for those customers, who are searching for Lotus Notes and Domino solutions. I fear that unless said catalog (or store) is in plain sight, or unless users are motivated to search for a solution then their effort may be wasted.

In my opinion an appstore (or catalog) on its own, without reviews, tv ads and advocates is nothing more than yet another website.

 * I don't actual work for Apple. In fact I have never worked for Apple and any resemblance to any apple employee is purely coincidental. I do, on occasion, eat apples as they are a healthy and nutritious snack.


  1. There's a really telling aspect of this on Ed Brill's blog, in my opinion...

    If you scroll down to comment 14, I asked Ed how much he spent at the App Store in the first month with the iPad. His answer was about $20.

    It's probably unfair to extrapolate that linearly, and suppose that Ed would spent $240/year at the store. Presumably he would at some point have all the apps he needs. Then again, there are new apps being published to the app store at an outrageous pace, so it's a fair bet that he'll discover new needs on an ongoing basis.

    Just to pick some arbitrary numbers here, let's imagine that someone like Ed might by $20 of apps in the first month, $10 of apps in the second month, and then average $5/month on an on-going basis. That's, what, two or three new apps a month? Seems reasonably to me, given the 200,000+ apps already listed.

    So in the course of a year, a user like Ed would spend 20+10+(5*10) = $80 in the store.

    If memory serves, Apple's store retains 30% of the price of the app as revenue to Apple. So in this case, Apple would make .3*$80 = $24/year from Ed. Apple's ISVs would make $56/year.

    Ed, of course, assuming he's a rational consumer, would be gaining more than $80 in value, else he wouldn't have given up the money.

    So $24/user/year. Anyone know the average maintenance for an Notes/Domino CAL? I think it's pretty close to that number. If it's within 10%, then we can reasonably say that an App Store, at least for Notes & Domino, could double the revenue stream from maintenance for IBM.

    If you could put up a website and write a plugin for it that could double your business, wouldn't you?

  2. @Nathan,

    I guess your numbers assume that IBM could generate the same demand and desire for apps to make that a good ROI. My point being that an appstore without the demand and desire may not be beneficial. To make it successful IMHO you need to focus on all areas, not just one (i.e. just the appstore).

    I'm amazed that Apple run adds on prime time TV that effectively promote apps written by someone other than Apple - which subtly promotes the iPhone/iPad.

    I don't want to take anything away from the Lotus Know campaign, which is great coverage, but could you imagine IBM running a prime time ad showing with eProductivity or IdeaJam (or any one of apps and plugins out there) ?

    I don't think this, on its own, is the answer - but it does make you think eh!

  3. By no means am I suggesting that building an App Store and then just crossing your fingers is the way to build a success. Certainly Apple's ad campaign has helped the process dramatically.

    However, does the campaign help sell apps or sell phones? I think it sells phones, personally. It sells that the phone (and pad) are platform devices that you can do all kinds of cool stuff on. And no matter what horror stories you've heard about how much the iPhone sucks AS A PHONE, that doesn't matter because it's so cool AS A MEDIA AND GAME DEVICE.

    If IBM wanted to drive demand for the Notes client itself, then prime time ads with an App Store and some cool plugins/templates would create awareness of what the client could do. And frankly, it would draw the conversation away from messaging, just like Apple did with the iPhone. People freely admit that it barely scrapes by as a phone, and no one cares because it kicks so much ass as a platform.

    Could that be a more perfect parallel for the Notes client? It's the exact case that Notes advocates have been making for a over ten years!

  4. Good post Tony. Doesn't the offering of "free apps" play a significant role here? By offering free apps on the Apple (and other) App Stores we remove the biggest (potential) barrier for adoption. In the process we are enticing people to train and learn the process by which applications can be acquired. If the incremental cost of acquiring is significantly less than the (business) value, we know how to make an acquisition, and we now we trust the install/deployment process provided then taking the next step of purchasing software becomes less challenging technically and less of a risk to the "consumer. i.e. Would it make sense to combine the concept of OpenNTF with an App store so that they might leverage each other. I agree personal marketing can make a big difference to sales but nothing sells as well as "FREE".

  5. @Peter,

    Not really sure how much of it is the free part. For most of the apps that I value, the free ones have been a case where I have evaluated the app before buying the full version - and install the free version was very easy. If the process was complicated then perhaps I wouldn't try as many free versions of apps either.

    It's like buying a case of beer and offering the contents for free on my blog. Not that many people read it, therefore the demand for the free beer will be pretty low (also not many readers would be in the local vicinity).

    If I go an place a flyer at the bottom of the road advertising free beer, then I would get more people taking up my offer, than from my blog.

    If I place an add in the free local newspaper then even more people would take up the offer, based on their readers.

    Free is an attractive price, providing that you a) know about it and b) are in a position to take advantage of it.

    It's the combination of remove barriers, making it easy and creating a need (or desire) that really make the iPhone/Appstore a success. It will be interesting to see how the other smart phone providers try and do the same thing, and the relative success.

    Thanks for the post, and congrats on the recent move. It's ironic that you'll be working for NTF. :-)