David Barnard wrote a really interesting post on the recent acquisition of Sparrow. This is a must read for any mobile developer expecting to make a living from their craft. This could actually very well be the best article written on the topic.
But I want to warn people against his conclusion. I think there are two elements of his rationale that are flawed. He wrote back in 2009:
unrealistic pricing expectations [...] may haunt the entire mobile software industry for years to come
And added today:
In hindsight, I think “haunt” was the wrong word to use. Though it wouldn’t fit quite as well semantically, or be quite as provocative, I think the right word to use there is “change”.
The reality is that Apple successfully delivered a monetization platform, this is actually one of the most fundamental change introduced by mobility (with location). Not so much because developers can -now- potentially be free from the -bait- model the Web introduced where the end-user "is-the-product", but because now commerce can be delivered in a fundamentally different way. An app is just an agent of commerce not the object of commerce
The Web never ever changed how commerce was done. e-Commerce was commerce and is still commerce 20 years later, you still take this bit of plastic out of your wallet, and you still establish a one to many relationship between yourself and a bunch of people. Even in other areas such as outsourcing, the Web didn't change much, call centers existed before the Web, they simply moved. The Web just abstracted (a bit) location, but for all intend and purposes the Web didn't change a single thing to the way commerce was done. It might have gave you the illusion, that's all.
What The Platform is changing fundamentally is that it introduces a mediator in the commerce relationship, a One-to-One-to-Many relationship, actually it is even more complex than that, it introduces a One(end-user)-to-Many(apps)-to-One(platform)-to-Many(merchants, service providers). It does that in a relatively secure and private way allowing financial transactions to flow between all these actors.
Claiming that you can't make a living because a single business model (selling apps on the app store) doesn't seem to bring in enough income is at best short sighted. I can come up with at least 10 transaction models (exclusing ads which transformed the web into a zoo) that will help developers and service providers monetize their relationship to end-users.
Just this morning I stumbled upon this eBook that the French newspaper Le Monde just published. It was written on iBook Author, one of the most amazing "app" I have seen in a long time. And all the sudden everything became clear, this was the business model the press was waiting for: news has become a commodity, nobody wants to pay for news. Social network have forever disrupted the relationship between newspapers and their readers. But ... at roughly $5, lots of people might pay for the analysis behind the news, the broad perspective that the journalists can provide because they follow astutely "the news". And yes, in case you have not noticed, in a fairly incredible turn of events, turning the entire model of the press on its head, the "news" becomes the ad that would lead to customers buying the eBook. What better ad, than a piece of news that will drive people wanting to know more, wanting to understand deeper perspectives well beyond the news?
The second flaw in David's rational is the "one-size-fits-all" mentality of app developers. This is a major flaw, again inherited from a very old age, when you could not address a billion potential customers. This is what "The Platform" changes, unlike the Web, which at best allowed one person to buy stuff and services from a remote places, the platform turns the entire commerce model on its head. It allows anyone including David to sell into a one+ billion user market. Do you really think that "one app" can appeal to 1B users? Angry Birds, anyone? Isn't it time to rethink what software is? Don't you think that a) if you are lucky, one app would only resonate with a small subset of this billion users and b) if you are not, you may never find your market, when in reality a different set of features organized in a family of apps could have found many "puddles" of 10-20 million users? Take any of David's apps, don't you see how they could be organized into a family of apps that could appeal to many different market segments, geographies, ... even price could be different. Some users might be paying $20 for a premium app, other would never pay more than $.99 for a couple of features, but maybe that's a 100 million puddle.
For the last 20 years our economy has been trained to standardize products and to perform binary commerce transactions. I don't know the future, all I know is that people who will not think out of the box page and people who will not try to understand the tectonic shift introduced by the Platform will come to the wrong conclusions. In essence, the only thing these people are telling us, is that BAU (Business As Usual) is dead because it does not work on the platform.