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App Store Roulette and Suicide Truckers

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You walk into a casino. All around you are slot machines. Most folks sit with a vacant stare, feeding coins into the slots. Every now and then a little money comes out. The folks smile, then continue feeding money.

Less occasionally, lights flash, horns honk, and there's a big payout. Maybe several hundred dollars. Maybe thousands (or more). Everybody stops what they are doing and gawks. "Gee! This could happen to me!"

And even more people are pulled into the pit to play the slots, each one thinking how he would spend the money he'd get if only he'd "hit it big"

Many developers look at this and shake their head. How could these folks be such suckers? Can't they see how they are being manipulated?

Then they go write an app for an app store somewhere based on reasoning just as bad.

Just like rubes in a casino, developers are a scarce and valuable resource for folks who own a walled garden. Without a lot of developers and a lot of apps, these platforms can't appeal to the masses. Amazon or Apple or whoever can't write all the apps that the public might need; nowhere near it. But they can spend a lot of money convincing developers to write the app for them. Don't actually pay the developers. Simply convince them that they might become rich.

The beauty of this is that the developers who hit it big are more than willing to tell the world. After all, it's free publicity for them, and even more money. Nowhere obvious is information on how many developers fail for every one that hits it big, or the average number of hours building an app versus the payoff. Yes, some of these numbers have been guessed at, and every one of the studies I've seen shows that it's a sucker's game.

And guess what? If you're really successful and make millions? The walled garden owner is just as likely as not to simply shut you down without warning. Or -- and this is especially painful -- shut you down, then steal all your ideas and roll it into the next version of their ecosystem.

Wonder why Twitter wants no more twitter clients? Because it threatens their power, that's why. If you think it has to do with consistent user experience you're smoking rope.

The best exit you can have as a "true" success -- and not a one-hit wonder -- is to be bought out by the owner of the garden, but don't bet on it. They are just as likely to sabotage anybody looking to be a threat. Yes, owners like Twitter will couch their statements in terms of how it impacts users, and yes, you can spin it that way to a certain degree, but that's not the important thing. There's a slight-of-hand here. The hidden assumption is that the walled garden owner is the final arbiter of what users want, not the users themselves.

When a walled garden owner shuts down a inside competitor, their calculations are based on impact on both their users and developers. Quite frankly, most developers aside from whining a bit could care less what happens to another developer as long as you keep them focused on the big payoff. Do you really care that security is taking some slot player outside and what the reasons are? Probably not. They probably had it coming.

I have been suspicious that the app game is a sucker's game for some time, but recent moves by app store owners -- including the totally over-the-top claim by Apple that it owns the term "app store" -- has convinced me that it's time to call bullshit on the whole thing.

Yes, you can make a fortune with apps. Yes, it is the best and easiest way to get your work out in front of millions. But there is no such thing as a free lunch. If you're lucky, you'll write a few apps and make tens or hundreds of thousands on each one. More commonly you'll spend a huge amount of time working on something that pays back a few dollars per development hour. Then you'll read about some other guy making a fortune, and you'll spin the wheel again. The only person that wins at games like this is the house.

Twenty-Five years ago I worked as a clerk in a truck shop. As part of that, I created a DBase program to keep track of profit and loss. Not only did the shop run trucks, it also contracted with outside vendors to deliver cargo. So each month the vendors would pitch various rates and we would analyze them against our in-house costs.

Many times the vendor's rates would be well below what we could do. My boss, an old diesel mechanic and self-taught executive, would always turn these guys down. "Damn suicide truckers" he would mumble.

What's a suicide trucker? A guy who is so desperate to make money that he completely underbids what he can actually work for. He is so focused on making money -- anything -- that he'll put in a thousand dollars worth of inventory and fuel costs to make $800 worth of income. It's the idea that any income beats no income. Framing the problem as all-or-nothing. It's the lack of understanding opportunity costs.

There's an old business joke that goes something like this:

"We're buying watermelons at two dollars each and selling them for one dollar"

"How can you do that? Don't you understand you are losing money?"

"Sure, but we'll make it up in volume"

Suicide trucker or app store developer, it's all looking the same from where I sit.

3 Comments

So if all these "suckers" wise up & stop writing apps, who will write apps for my phone & tablet? What kind of alternative app store model do you propose? I'm amazed at how many free apps are available that are actually very good. They may be self-promotion (Look what I can do! Now please buy my next one) or ad supported or just a labor of love, though I would think that younger developers could get a lot of satisfaction & experience out of creating apps. It may seem like a fool's game to a senior developer who has moved beyond taking such risks, but I'm grateful that a bunch of somebodies are out there writing these apps that I find incredibly useful, entertaining, or both. If I find a free app that's a keeper I always try to send a donation to the developer.

I don't think there's anything wrong with writing apps. It can be a great way to get word out about your development skills, it can be a wonderful gift to your fellow man, and it can be terrific practice for writing bigger things.

And in a third-world country, it can even make economic sense. After all, who cares if your Doodle-Widget came from France or Liberia? Doesn't really matter, does it?

My point is about the economics of writing apps inside a system that you do not control and that is owned by forces who may not have yours or the customer's best interests in mind. App developers get stars in their eyes, and my only goal is to talk a little sense into them. If after "taking their medicine" and doing a reality check, they still want to write apps? I say go for it. I wouldn't rule out writing my own app at some point in the future -- I'd just be really careful I understood what I was getting into.

In fact, there are types of apps where it makes the most sense to write -- apps where the developer can still stand to make some serious change. But I'll save that analysis for another day (and it would also help if I demonstrated that it works first instead of just blabbing on about it! LOL)

First: s/slight of hand/sleight of hand/g

Second: You're right. A friend of mine spent untold hours writing a very clever game application for iOS and cleared less than a thousand dollars. The amount you can charge is constrained by your peers being "suicide truckers". I think it's OK to do one as a calling card, but ultimately you're at the mercy of the store owner.

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About this Entry

This page contains a single entry by DanielBMarkham published on March 22, 2011 8:58 AM.

20 Videos of the 2011 Japanese Earthquake and Tsunami was the previous entry in this blog.

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  • Todd: First: s/slight of hand/sleight of hand/g Second: You're right. A read more
  • DanielBMarkham: I don't think there's anything wrong with writing apps. It read more
  • SubAstute: So if all these "suckers" wise up & stop writing read more

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