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Brands can get a generous lift when affiliated with high quality products such as the iPhone. But what about the applications in the App Store? Let's look at why Apple should build a sustainable eco-system for technology-based mobile applications, which is the key to product quality and research into the potential of mobile applications that brand marketers can harness. 

The App Store is not the first, just the most successful. It is backed by a team that put marketing skin into the game.  If this were football, John Madden would be proud. We all know that the marketing shoulder elevating the App Store is television advertising, and Apple invested a hunky hefty bear of a budget into this.

The breakeven point, where apps sold equal market development funds invested, is on my mind. When that day is and what it will look like is probably known only to those who reside inside of Jobs & Company’s underground marketing lair which is rivaled in secrecy only to that of Dick Cheney’s. It was, that is until Biden revealed the VP's bat cave over dinner.

So how much money has Apple made off the download of 1bn applications? According to a Sand Hill Road VC, Jeremy Liew of Lightspeed Venture Partners, Apple has earned $45M. He suggests that 25M – 60M paid apps have been sold.

While Liew’s analysis is based on survey and supposition, it’s logical. However, in August 08, Steve Jobs touted $1M per day in sales which surely throws a wrench into Liew’s computations.

I wonder how many of the Apps are the 99 cent variety and how many are true multi-layered applications developed by teams of engineers?  Liew suggests that the O’Reilly survey be the guide post with its calculation that the mean price is $2.65 while weighting in at $1.99.

Peter Cooper, using the Mobile Orchard supercomputer, has laid out an analysis of Free vs. Paid applications for the App Store. The bottom line to his study is that the success of a category of applications depends on whether consumers want to pay for those types of application, and how much they will pay. Since freebies/99 cent apps are winning in volume, do customers see the need in technology driven mobile applications? And, if they do, are the volumes down because the consumer has come to expect applications to be 99 cents or free?

Pricing applications when you don’t have to worry about the revenue is easy. However, an application developer creating multi-layered high-technology applications as a business driver with the expected revenue to support growth needs to charge much more than 99 cents or even $1.99.

This leads me to reflect upon the almost flawless marketing execution by Apple…  Wow!  But, what about the infrastructure support behind the OZ-styled marketing?  Has it given equal time to designing a sustainable marketing model to support and enable wireless technology companies to thrive?   

I’m not talking about the awesome job they’ve done of giving a dog walker the tools and common business model to enter application development and sell their product, I am talking about their support of companies building complex technology based apps that prior to the iPhone release would have been worth $5.99, $9.99, and $14.99 per application per month on a subscription service to cover the cost of research and development and run a prosperous business. 

I worry that Verizon, AT&T, Sprint, and Handmark will consider the Apple App Store model of low price, single pay without subscription. Then will the tech driven companies reduce product quality and research to meet the low threshold of pricing that the App Store has set for the industry. Truly then, the potential of mobile applications to better our lives will be limited.

While Apple and RIM each have one guiding phone with infinite models available, other manufactures have plenitudes of form factors, operating systems, and content platforms for sale.

A company that develops technology based mobile applications needs to port their application to as many as 50 phones per sales cycle per wireless carrier to be featured in the carrier application store. Each of those phones requires a different set of know-how, and that is a real human resource cost. 

Profit is derived through subscription over the field of phones. Yet, if you only have to develop for iPhone or Rim, the profit model is simple. This makes iPhone a leader and with leadership comes responsibility. In this age of green, sustainability is the goal. What does Apple consider its responsibility to the sustainability of the research, development, and financial prosperity of the ecosystem for mobile applications based upon hard core technological development?

I look forward to having my worries eased. 

Now, what does all this have to do with the marketer? Brand affiliation; the lift your brand will get by associating with key iPhone applications purchased from the App Store. What constitutes quality for you and your clients? What will degrade your brand’s value and what will illuminate its goodwill value? Today we have more questions than answers. Over the summer, I look to provide you answers that I hope will embolden your investment in mobile marketing.

Tina Whitfield

Published 26 May, 2009 by Tina Whitfield

Tina Whitfield is CEO of EquisGlobal and a contributor to Econsultancy.

12 more posts from this author

Comments (3)

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Boyd

Great post. I have been surprised by the little attention this topic is getting.  I believe that over time, as the app stores (Apple, Google, Blackberry, Nokia, etc.) become so inundated with apps, the better bet for brands (except for perhaps the preeminent global brands capable of drawing enough downloads and use independently) will be better served by being part of established, quality apps than necessarily having their own apps.  And even for the sizable brands, they will find ways to sponsor and advertise on quality apps aside from having their own apps.  

We are in the Wild West days of mobile applications and it will be interesting to see how the app ecosystem evolves as the dust settles.  While there will always be the occasional fad app like iFart, I suspect the emerging trends will be for more robust apps built on all on major platforms by more serious companies spending lots more money than they do today.

Call it Apps 2.0.

over 7 years ago

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Pothik

You cannot be sure about that but the importent thing is high posibility with little risk. I know a site for this sort of thing.  Its http://objectdevcorp.com/IPhoneAppDevelopment.aspx. I am still playing with it; just amazing.

over 7 years ago

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Ryan Brandys

I think you're confusing environmental sustainability with business model sustainability. The "green" movement is about sustainable energy use, sustainable waste processing, and sustainable economic growth. You're implying the green movement has any interest in helping make sure coder's R & D is protected. Other than that, I agree that the model of cheap apps appeals to the lowest common denominator, causing "impulse buy" apps to rise to the top. I think the price of apps depends less on "the amount of value created per user" and more on "the number of users expected to want the app at all" So we will see better economies of scale selling apps with a more universal appeal, and Apps with a narrow, specific niche will have a hard time staying profitable, because of the stigma associated with paying more than 99 cents for an app. -RB-

about 7 years ago

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