Is Apple making the same mistake all over again?

With Apple’s recent iPhone SDK release, the local tech scene is planning an event. However, as some of the comments have pointed out, Apple’s licensing arrangement is a tad restrictive. This all sounds vaguely familiar. As it has been told to me, when Apple originally released the Macintosh, the software kit was expensive and exclusive: you could only buy your tools from Apple. This limited the availability of 3rd party Mac software, which in turn limited the adoption of the computer itself.

Fast forward to today with the iPhone kit. While the $99 for a full development license (allowing you to test on your iPhone instead of an emulator) isn’t exorbitant, it’s certainly a hurdle. The biggest offense though is the distribution system. You are required to distribute your application through Apple’s site, have your application blessed by Steve Jobs, and only then do you get to keep 70% of the sales revenue.

Apple is trying to double dip in the upper right hand corner of the software business model map: first by selling the iPhone, then by selling other people’s software products. Perhaps the iFund they’ve arranged will soften the blow. My guess is that iPhone developers will move towards the upper left corner instead so that Apple will have less of a cut of their revenue. Why would an iPhone developer spend large resources on developing a rich iPhone app, only to hand 30% of their revenue to Apple?

4 Responses to “Is Apple making the same mistake all over again?”

  • I’ve heard some decent arguments for the entry fee – basically, with Apple allowing people to upload apps to their store, they want to keep the 13 year olds who aren’t good programmers out (the argument was stated better than that). Also, one could make a case for the developer split, but I’m not as willing to buy that argument. We’ll see how it all plays out.

  • admin:

    Yeah, the “13 year old” or “quality control” argument is still essentially Apple’s elitism though. (Granted, a certain amount of this exclusiveness is what helps sell their products.)

    The revenue cut is just a blatant money grab.

  • vinnie:

    “Why would an iPhone developer spend large resources on developing a rich iPhone app, only to hand 30% of their revenue to Apple?”

    1. 70% of something is still more than 100% of nothing, which is the current iphone developer landscape.

    2. 30% doesn’t seem too bad of a charge for most of your marketing, distribution, and sales channel. With the app store a lot of those three areas of your business are covered.

  • admin:


    #1 So would you spend your energy on developing a) a fee-based web application formatted for mobile devices where you would keep 100% of your revenue or b) a iPhone specific application where you keep 70%?

    #2 I can see the argument for the distribution/transactions, but that usually isn’t more than %5-10 of your costs (thinking of CC charges, bandwidth, and some sort of mechanism to make sure that people can’t *easily* copy around your code). Committing the remaining 20-25% to Apple’s marketing and sales efforts seems to be a bit princely to me, especially when that’s something *you* should want control over (even if you hire someone to do it).