Your Thoughts on the App Store: Apple Should Change, but Voluntarily

In an earlier post I mentioned just some of all the the other app stores that exist. And there is nothing restraining another developer from introducing another operating system, or opening another App Store. though they won’t be able to run on Apple hardware.

Remember how Windows Phone was going to conquer the world? It was as successful as Zune.

I agree with this 100%. To date, Epic hasn’t broken out its earnings for Fortnight, but I did find out what Fortnight earned this past April:

"In 2019, Epic Games reported $4.2 billion in revenue and $730 million in earnings before interest, taxes, depreciation, and amortization (EBITDA, a key measure of profitability). Revenue for 2020 is forecast to be $5 billion, with EBITDA of $1 billion.

In April alone, thanks to the pandemic, Fortnite revenue was $400 million, sources told me. Epic has said that in April, players spent 3.2 billion hours in the battle royale shooter. Fortnite also garnered a huge amount of attention for staging a virtual Travis Scott concert that drew more than 27 million people."

https://venturebeat.com/2020/06/15/epic-games-shareholders-seeking-to-sell-stake-for-750-million-at-17-billion-valuation/

Something else I find even more interesting in the article quoted above about the ownership of Epic:

“Tencent bought 40% of the company in 2012 and it remains a shareholder.”

Tencent developed and owns We Chat, the biggest ecommerce retailer and biggest of all retailers, in China. Tencent, at one point, made a big stink about Apple’s 30% revenue cut but ended up paying it. Tencent recently agreed to paying Apple 30% of what is now a paid news app:

Tencent is also the biggest Chinese online game developer. And Tencent has its own App Store and its own payment systems:

https://appstore.tencent.com

And here’s the cut they are getting for their games:

“The social media giant is seeking as much as 70% of the sales generated from its games, up from just 50% now, said the people, who requested anonymity discussing private negotiations. That would bring Tencent’s portion in line with the proportion shared with game publishers on other platforms, including Apple Inc.’s iOS store and Google Play, which each keep 30% of revenue that comes from apps.”

https://www.bloomberg.com/news/articles/2019-07-11/tencent-presses-chinese-app-stores-for-bigger-cut-of-game-sales

As long as there are alternatives to the App Store, I don’t care much about what Apple does with it. But given how they use it to squeeze out the competition, that’s bad news for all of us. The App Store is now an integral part of the OS that you can’t avoid. It’s a loose comparison, but I remember when Microsoft integrated Internet Explorer into their OS, and they were sued for monopolistic practices. That was a long time ago.

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What evidence do you have that they are doing that? I have yet to see any concrete examples, other than whiners such as Spotify that complain, and a sort of general meme that Apple’s abusing their power.

As far as I’ve seen, whenever Apple has restrictions on iOS there are sound security and policy reasons for doing so. For instance, Apple doesn’t allow any other web browsers than the built-in Webkit engine on iOS (so “alternative” browsers on iOS are really just a different user interface on the same underlying tech that Safari uses). Some consider this unfairly restrictive, but browsers are a huge security hole (especially javascript) and Apple is smart for limiting infection vectors.

I find plenty of competition on iOS and you aren’t restricted to Apple’s solutions – Apple’s apps and services are often just easier and better integrated. That’s not unfair, just a side effect of them building the platform and they’d be fools to not take advantage of their position.

I actually wish Apple was more strict with app developers. There are so many junky and scammy apps that while technically in compliance with Store rules, aren’t benefiting anyone. If you look through the history of the App Store, every time Apple opens a window there are dozens of developers trying to make it a door. (A good example are the scumbags who took advantage of Apple’s screen time monitoring APIs to abuse privacy and track users.) I love Apple’s recent trends to improving privacy and stop user tracking.

I’m not saying the Store or Apple is perfect – I certainly wish Apple was clearer in their rules and less absolute in some of their decisions – but they are always trying to improve and make things better. (For example, I just read about a developer that successfully used Apple’s new appeals process to overturn their app rejection. The reviewer had misapplied a rule that didn’t apply to their product. Prior to this summer if that had happened, the developer’s only recourse was to change their app or whine to the media and hope Apple would notice.)

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MS lost the US anti trust case that went all the way up through the Supreme Court because of monopolistic restraint of trade; the case had nothing to do with pricing. Weather or not MS integrated IE’s software into the OS wasn’t the problem either; all operating systems developers can build whatever they want unless it’s something illegal. Microsoft lost because they made it impossible to install another browser on Windows. It was Netscape, who was then owned by AOL, who brought the case.

Anyone who wants to avoid downloading an app from Apple’s App Store can side load an app. It might be a PITA to do so, and sideloading means throwing anything resembling caution or a concern about privacy, to the wind. But Apple created the App Store to encourage developers to build quality products that would work beautifully and safely on iOS, which is the opposite of the road MS took at the time.

That’s exactly the problem. They only allow this one venue to get apps.

Nobody is arguing it shouldn’t be possible for users to restrict themselves to the walled garden. But for those users who prefer choice and competition over nanny Apple exclusivity, there should be a sideloading option. Just as on the Mac. No Mac user would ever argue the current situation with MAS as well as independent dev distribution is untenable. It’s just fine. And if it works on my Mac, it can work on my iPhone.

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I don’'t think it’s about support costs since Apple would just charge to clean up the mess. It’s about the user experience and that would cost the user and Apple more than money. While iPhones and iPads can do a lot, they are still more about consumption. Most people would not benefit much from side loading.

Perhaps, but I’ve never heard any indication that Apple support is significantly impacted by support for independent Mac apps causing problems.

As we’ve noted in the articles, a great deal of Mac software was sold directly via developers using services like Kagi and eSellerate that charged far, far less than 30%. I’d have to research this, but my impression is that boxed Mac software in a retail channel went away well before 2008 when the App Store launched. For instance, from Wikipedia:

Crushed by competition from online and other brick-and-mortar retailers, CompUSA began closing locations in 2006. By 2008 only 16 locations were left to be sold to Systemax. In 2012, remaining CompUSA and Circuit City stores were converted to TigerDirect stores, and later closed. CompUSA now operates as an online-only retailer.

When the App Store was announced, here’s what we we wrote:

Response to the revenue sharing among the developer community was largely positive, with many saying they’d expected a 60:40 split, and would have of course preferred an 80:20 split. 70:30 is entirely reasonable in our opinion, partly because that’s an all-inclusive fee covering processing, bandwidth, hosting, and marketing; in the traditional book world, for instance, the split between publishers and bookstores is often 50:50. Many ecommerce providers charge 10 to 15 percent for less than Apple will be providing via the App Store’s directory and interface.

In retrospect, yes, the App Store provides more than a straight ecommerce provider did, but it also came with a lot of headaches and limitations that were unique to Apple. And the advantages to the developer, like marketing and discovery, seem to have disappeared with the App Store given the vast number of apps and the need to pay for ads.

Standard transaction fees from the likes PayPal and Stripe are 2.9% plus $0.30. Apple gets around that in part by bundling multiple transactions together. And probably lower negotiated fees from credit card companies due to volume.

From what I last read iOS user outnumber macOS users by 10-1. In short there are well over 1 billion iOS users. So the scale of support is quite different from the Mac and like Windows it would be a juice target for malware hackers.

As someone who tries to use language precisely, I would like to make a quick but pertinent point.

These words are not identical or interchangeable: criticism, complaining, whining. Each has its own meaning.

This is obvious exaggeration, to the point of being false.

This is called an article of faith.

My guess is that the primary concern of the current executives at Apple is in making as much money as possible, not in improving its products. This is true of most companies in the world and, let’s face it, most people. I want money, too. I like it, too. But it’s not the number one arbiter of every decision I make and every action I take. I prefer moderation to fanaticism and obsessiveness.

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Let us look at the App store as a substitute for the retail store.

  1. many companies if not all PAY to be on the shelf of the store and the more visible the location the higher the price.
  2. The product must give the store a profit based on the selling price of the product. Counting on the type of product the store gets a higher or lower percentage. Also the markup (the multiple the retail customer is charged ex. for a quart of milk the multiple many be x1.5 meaning that if the store pays $1.00 for the the container the the retail customer pay 1.3x that amount or $1.30. the reason for the low multiple is that you will buy milk about one a week so it goes off the shelf quickly. the other extreme is a pair of prescription glasses. Because you will by a pair maybe once every 2-4 years the multiple can be from 5-3X the higher multiple being for lower cost frames so let us take the same $1.00at the low end, not even close to real #'s , so the lower cost frame would be $1.00 x5 or $5.00for a higher priced frame let us say $3.00 x 3 giving a price of $9.00. these difference are caused by the fact the higher price item will be on the shelf longer or people will pay a premium for a name brand. there is also the cost maintaining the stock on the shelf longer.

But the App store doesn’t do this it charges the same cost to the end user 30% no matter the price meaning that the profit it get is determined by the price the manufactures charge. It is not a tax, with all of the negative connotations of that term, but merely the charge to the manufacturer of maintaining a place that people feel secure in buying their products from.
We don’t call the profit the Amazon, Walmart, Target, B&N, Adorama etc charge a TAX because it is not. It the way that sites make their profits to maintain there business.
In addition Apple tries to makes sure that all of the programs have no security problems for the purchaser, They don’t always succeed but they try. That is more then most if not all retail stores do.

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No, it’s based on evidence. I watch what Apple does and they keep adding features to the App Store, like appeals process I mentioned. In the past they’ve made review times faster and improved the user interface and presentation of the store. They’re not done by a long shot, but they’re still working, slowly but surely.

Why can’t they do both? I see it as more of a tick-tock syndrome, where for a time they focus on certain money issues, then back on products. For instance, a few years ago the stock was dreadfully undervalued as Wall Street focused exclusively on iPhone sales and Apple began making noise about their services business. Now that has taken the focus on Wall Street has realized that 1B iOS users means a steady stream of revenue for Apple regardless of if iPhone sales are up or down a hair and the company is worth $2.2T.

Recently Apple (finally) fixed their laptop keyboard issues with a return to a better design. It took too long, but maybe they were distracted by other more pressing issues (laptop sales are a drop in the revenue bucket compared to iPhone sales, so not the highest priority).

This is 100% true, and this is not like Apple is skimming vigorish off of bets or loans like bookies do. And Tencent, who owns 40% of Epic Games, recently reduced the % they charge in their App Store from 40% to 30%. They also have the option not to develop or update an iOS or Mac version of any of their games if they object to the charge so much. It’s not like they were unaware of the 30% when they decided to develop Fortnight; there wasn’t any whining about it at the time.

I still suspect the real issue behind all this is about how the upcoming iOS 14 privacy controls will significantly decimate Fortnight’s even more lucrative ad sales and sponsorship revenues. Persistent tracking is not an issue that consumers will be up in arms to prevent, but they are scoring points with crocodile tears by whining about excessive vig.

But it’s not. Particularly in the Mac world, essentially no software has been sold in a retail store in many years. Heck, Macs haven’t even had optical drives since 2011-2012, so even if you could find software in a retail store, you’d have no way to install it without downloading it anyway.

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Well perhaps a good time to say that this week saw the arrival of my first set of boxed software in what must be fifteen years.

Antidote states on their site that you can download and pay them directly or you can buy from a reseller and it will be cheaper. So I checked on Amazon and sure enough it was 60% of the cost. Thing is they ship you a box, with a printed manual (in French…), and yes… a download code to enter.

And we all got a kick, given these times, of me unpacking a box and saying “hey, the antidote is here.”

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Wow, that’s not something I’ve seen in decades either. I would question the economics of producing a box and 224-page manual and selling it for a lot less than they could get directly. I have to assume they feel like they’re getting sufficient distribution to make it worthwhile, but given that they’re distributing mostly near Montreal and in France, I suspect that someone at the company has connections with the FNAC chain in France (nearly all the locations there) and something equivalent in Canada. The fact that they say you need to check for availability before visiting says to me that many resellers may not actually stock it.

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I respectfully disagree with your economic analysis, and don’t even understand what you mean by “no marginal costs” for “digital goods.” A game that provides entertainment and enjoyment — which is where this all started — is in ever more ways indistinguishable from a movie/video experience, as creators try to develop as much interactive experience as possible. I would argue that there s no business model close to a mobile device platform that allows access to a variety of media, interactive and otherwise, and a theater owner’s selling tickets to movies.

My point is that movie theaters have a significant overhead in rent, salaries, and maintenance, among much else. Movie ticket prices build in those costs.

Software sold online has essentially no extra costs. You can sell 1000 copies for the same investment as selling 10 copies. Increase your sales to 10,000 or 100,000 copies and your costs may go up, but only slightly. Storage and bandwidth costs are infinitesimal on a per-copy basis.

That’s why I suggested that they’re entirely different business models.

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