Economy

Companies may go to the web instead of native iPhone

It appears that there is a better path for many companies than just going to Android. That would be web applications. The iPhone sports a great web browser as does the Android and other mobile devices. Mobile Safari could block many sites or cripple functionality in order to block many applications that have decided to drop iOS and go to the web. But doing so would hurt the user experience on the iPhone and would be a policy sure to upset the masses.

Readability posted an open letter to Apple explaining their thoughts on the matter which I think are true for many companies. Apple has made it difficult or virtually impossible to target iOS as a platform with their new rules. Companies want to create a native apps in order to improve the user experience. If they are not able to do that, they will do their best with what they have and if they make fantastic web applications, that will drive web technology further and make it the platform of choice. It is open, no one controls it, and is everywhere. The comments on the open letter suggest that Apple will have to change their tune since so many are mad and the rule change. We will have to wait and see. But if it pushed open software, open platforms, and open business models; I hope they hold out long enough for it to take hold as I think most companies benefit when they are free to innovate and not have to cater to the whims of a platform owner.

Will iPhone users be flocking to Android soon?

Apple has laid out some new rules that require applications to pay 30% of in-app purchases to them. Many companies rely on these purchases in order to make money and support the development of the application. For example, LyricLegend made by TuneWiki, is one such app. It is a free download in iTunes and includes a couple of songs that you can play with. Afterward you can purchase song packs, usually 2 songs for $0.99, and play those in the game.

These are not old songs from the ’80s. They are popular current tunes, and probably require deals with the publisher of the song. There are royalties to be paid, development costs, business costs, and probably much more. Software at this level is not cheap to make.

Now there is a new rule that requires them to pay 30% of that $0.99 to Apple. That is $0.297 for each song pack. They are not allowed to increase the cost to cover this new expense unless they do so on their website as well. Apple has frequently changed the rules related to their iOS platform, and this time is no exception. The difference though is it will cost companies dearly if they want to stay. Most companies I would venture are not making 30% margin on these sales. That $0.99 has to go a long way toward paying salaries, royalties, marketing, and much more. Eliminating almost a 1/3rd of a company’s income could potentially bankrupt them. So what is a company to do?

Leave is my guess…

Where do they go? Android

Google is going to be doing something similar but it is not mandatory, and will only cost 10% which may actually be appealing to many companies. It could eliminate some expenses having to do with managing the sale. On the Android platform customers would still be able to run the applications they like and obtain the content they want. Companies would not have to forfeit 30% of their in-app purchases to Apple, and could charge different rates if they wanted to cover the 10% feel Google would charge for managing the purchase.

So my guess is that if Apple holds firm and requires everyone to pay 30%, most companies will see Android as a better financial alternative and flock to it as the platform of choice for mobile apps. Only time will tell of course, but I wouldn’t be surprised to see lots of companies drop their iPhone apps and offer users help in moving their in-app purchases over to Android.